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What changed in MATTHEWS INTERNATIONAL CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of MATTHEWS INTERNATIONAL CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+303 added−273 removedSource: 10-K (2024-11-22) vs 10-K (2023-11-17)

Top changes in MATTHEWS INTERNATIONAL CORP's 2024 10-K

303 paragraphs added · 273 removed · 179 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

32 edited+82 added−7 removed74 unchanged
Biggest changeCompany-Specific Risk Factors: Foreign Operations. The Company conducts business in more than 30 countries around the world, and in fiscal 2023 approximately 37% of the Company's sales to external customers were to customers outside the United States. In addition, the Company's manufacturing operations, suppliers and employees are located in many places around the world.
Biggest changeCompany-Specific Risk Factors: The Company's international sales and operations expose the Company to significant risks and failure to manage those risks could materially adversely impact the Company's business. The Company conducts business in more than 30 countries around the world, and in fiscal 2024 approximately 36% of the Company's sales were made from locations outside the United States.
A significant portion of the revenue of the Industrial Technologies segment is attributable to the sale of consumables and replacement parts required by the marking, coding and tracking products sold by Matthews. The Company develops inks exclusively for the use with its marking equipment, which is critical to ensure ongoing equipment reliability and mark quality.
A portion of the revenue of the Industrial Technologies segment is attributable to the sale of consumables and replacement parts required by the marking, coding and tracking products sold by Matthews. The Company develops inks exclusively for the use with its marking equipment, which is critical to ensure ongoing equipment reliability and mark quality.
The business supplies high-tech machines to large global customers and develops solutions collaboratively with them to make their processes more resource-efficient and their products more sustainable. Production capabilities are available in Germany, the Czech Republic and the United States, with design and assembly in Germany, Switzerland, Czech Republic, Canada and the United States.
The business supplies high-tech machines to large global customers and develops solutions collaboratively with them to make their processes more resource-efficient and their products more sustainable. Production capabilities are available in Germany, the Czech Republic and the United States, with design and assembly in Germany, Switzerland, Czech Republic and the United States.
Many of Matthews’ employees have highly specialized skills and subject-matter expertise in their respective disciplines, enabling the Company to deliver industry leading products and services to its customers throughout the world. Diversity and Inclusion: Matthews views diversity and inclusion (“D&I”) as a priority to be valued and promoted throughout its business.
Many of Matthews’ employees have highly specialized skills and subject-matter expertise in their respective disciplines, enabling the Company to deliver industry leading products and services to its customers throughout the world. Diversity and Inclusion: Matthews views diversity and inclusion (“D&I”) as a priority to be valued and promoted in every aspect of its business.
Industrial Technologies: The Industrial Technologies segment includes the design, manufacturing, service and distribution of high-tech custom energy storage solutions; product identification and warehouse automation technologies and solutions, including order fulfillment systems for identifying, tracking, picking and conveying consumer and industrial products; and coating and converting lines for the packaging, pharma, foil, décor and tissue industries.
Industrial Technologies: The Industrial Technologies segment includes the design, manufacturing, service and sales of high-tech custom energy storage solutions; product identification and warehouse automation technologies and solutions, including order fulfillment systems for identifying, tracking, picking and conveying consumer and industrial products; and coating and converting lines for the packaging, pharma, foil, décor and tissue industries.
Change Management: Matthews is a constantly evolving multi-national company, leveraging new ways of working to improve its quality, service and delivery systems to better help customers and clients succeed. Building change capability to support employees through changes accelerates new ways of working, minimizes productivity loss, and accelerates improvement measures.
Change Management: Matthews is a constantly evolving multi-national company, leveraging new ways of working to improve its quality, service and delivery systems to better help customers and clients succeed. Building change capability to support employees through changes accelerates new ways of working, minimizes productivity loss, and accelerates adoption of innovations and improvement measures.
The Company understands and firmly believes in the value that diverse experiences, perspectives, and ideas bring to the workforce and offer to clients. Matthews knows its employees deserve equal opportunities regardless of race, national origin, gender, gender expression, age, disability, religion, sexual orientation and more.
The Company understands and firmly believes in the value that diverse experiences, perspectives, and ideas bring to the workforce and offer to clients. Matthews knows its employees deserve equal opportunities regardless of race, gender, gender expression, age, disability, religion, sexual orientation and more.
Matthews knows that when employees have opportunities to learn and grow, see how their goals and objectives lead to something greater and understand their part in the organization’s success, it helps build a place where people want to stay.
BUSINESS, (continued) Matthews knows that when employees have opportunities to learn and grow, see how their goals and objectives lead to something greater and understand their part in the organization’s success, it helps build a place where people want to stay.
For further information on segments, see Note 20, "Segment Information" in Item 8 - "Financial Statements and Supplementary Data." Memorialization segment products are sold throughout the world, with the segment's principal operations located in North America, Europe, and Australia.
For further information on segments, see Note 21, "Segment Information" in Item 8 - "Financial Statements and Supplementary Data." Memorialization segment products are sold throughout the world, with the segment's principal operations located in North America, Europe, and Australia.
It also is possible that certain international contracts may include industrial cooperation agreements requiring specific in-country purchases, investments, manufacturing agreements or other financial obligations (known as offset obligations) and may provide for penalties if the Company fails to meet such requirements. 10
RISK FACTORS, (continued) It also is possible that certain international contracts may include industrial cooperation agreements requiring specific in-country purchases, investments, manufacturing agreements or other financial obligations (known as offset obligations) and may provide for penalties if the Company fails to meet such requirements.
Foreign Corrupt Practices Act (the “FCPA”); • changes in legal and regulatory requirements; • policy changes by the United States and foreign governments affecting the markets for the Company’s products; • changes in tax laws, quotas, tariffs and other market barrier; • difficulties in protection and enforcement of intellectual property rights; • restrictions on the export or import of technology; • failure to comply with the foreign data protection laws, including the European Union’s General Data Protection Regulation (the “GDPR”) ; • inadvertent transfers of export-controlled information due to increased cross-border technology transfers and the use of offshore computer servers; • transportation, including piracy in international waters; and • challenges relating to managing a global workforce with diverse cultures, backgrounds and labor laws.
Foreign Corrupt Practices Act (the “FCPA”); • changes in legal and regulatory requirements; • policy changes by the United States and foreign governments affecting the markets for the Company’s products; • changes in tax laws, quotas, tariffs and other market barriers; • difficulties in protection and enforcement of intellectual property rights; • restrictions on the export or import of technology; • failure to comply with the foreign data protection laws, including the European Union’s General Data Protection Regulation (the “GDPR”) ; • failure to comply with foreign sustainability-related reporting requirements, including the European Corporate Sustainability Reporting Directive; • inadvertent transfers of export-controlled information due to increased cross-border technology transfers and the use of offshore computer servers; • transportation, including piracy in international waters; and • challenges relating to managing a global workforce with diverse cultures, backgrounds and labor laws. 10 ITEM 1A.
Workforce Composition: As of October 31, 2023, the Company and its majority-owned subsidiaries employed approximately 12,000 people globally in 6 continents and more than 300 locations and 30 countries around the world.
Workforce Composition: As of October 31, 2024, the Company and its majority-owned subsidiaries employed over 11,000 people globally in 6 continents and more than 300 locations and 30 countries around the world.
The Company’s onboarding program reinforces its values and culture, supports its managers in creating a positive employee experience during the first 90 days and builds early commitment with all new hires.
The Company’s onboarding program reinforces its values and culture, supports its managers in creating a positive employee experience and rapid assimilation during the first 90 days which builds early commitment with all new hires. 8 ITEM 1.
Dry electrode technology makes producing lithium-ion batteries less expensive than the wet electrode process, and dry electrode manufacturing is also less impactful on the environment. These factors could contribute to increased utilization of dry electrode batteries in the electric vehicle market, and thus greater demand for this form of battery in the future.
Dry electrode technology makes producing lithium-ion batteries less expensive than the wet electrode process, and is also more environmentally sustainable. These factors could contribute to increased utilization of dry electrode batteries in the electric vehicle market, and thus greater demand for this form of battery production in the future.
Upon request, the Company will manufacture the memorial to the customer's specifications (e.g., name and birth date) and place it in storage for future delivery. Memorials in storage have been paid in full with title conveyed to each pre-need purchaser.
This concept permits families to arrange for these purchases in advance of their actual need. Upon request, the Company will manufacture the memorial to the customer's specifications (e.g., name and birth date) and place it in storage for future delivery. Memorials in storage have been paid in full with title conveyed to each pre-need purchaser.
Detailed financial information relating to business segments and to domestic and international operations is presented in Note 20, "Segment Information" in Item 8 - "Financial Statements and Supplemental Data." Years Ended September 30, 2023 2022 2021 Sales to external customers: (Dollar amounts in thousands) Memorialization $ 842,997 $ 840,124 $ 769,016 Industrial Technologies 505,751 335,523 284,495 SGK Brand Solutions 532,148 586,756 617,519 Consolidated Sales $ 1,880,896 $ 1,762,403 $ 1,671,030 In fiscal 2023, approximately 65% of the Company's sales were made from North America, 30% were made from Europe, 3% were made from Asia, and 2% were made from other regions.
Detailed financial information relating to business segments and to domestic and international operations is presented in Note 21, "Segment Information" in Item 8 - "Financial Statements and Supplemental Data." Years Ended September 30, 2024 2023 2022 Sales to external customers: (Dollar amounts in thousands) Memorialization $ 829,731 $ 842,997 $ 840,124 Industrial Technologies 433,156 505,751 335,523 SGK Brand Solutions 532,850 532,148 586,756 Consolidated Sales $ 1,795,737 $ 1,880,896 $ 1,762,403 In fiscal 2024, approximately 66% of the Company's sales were made from North America, 29% were made from Europe, 4% were made from Asia, and 1% were made from other regions.
The segment's memorial products also include community and family mausoleums within North America. The segment's other memorial products include bronze plaques, letters, emblems, vases, lights and photo ceramics that can be affixed to granite monuments, mausoleums, crypts and flush memorials. Principal customers for memorial products are cemeteries and memorial parks, which in turn sell the Company's products to the consumer.
The segment's memorial products also include community and family mausoleums within North America. The segment's other memorial products include bronze plaques, letters, emblems, vases, lights and photo ceramics that can be affixed to granite monuments, mausoleums, crypts and flush memorials.
Cremation and incineration equipment sales backlogs vary in a range of four to six months of sales. Backlogs vary in a range of approximately twelve to eighteen months of sales for mausoleums. Backlogs are generally in excess of a year for purpose-built machinery projects.
BACKLOG: The Company's current backlog is expected to be substantially filled in fiscal 2025. Cremation and incineration equipment sales backlogs vary in a range of four to six months of sales. Backlogs vary in a range of approximately twelve to eighteen months of sales for mausoleums. Backlogs are generally in excess of a year for purpose-built machinery projects.
Waste incineration systems encompass both batch load and continuous feed, static, stepped-hearth and rotary systems for incineration of many waste types, as well as equipment for in-loading waste, out-loading ash and energy recovery.
Supplies are consumable items and replacement parts associated with normal crematory operations. Waste incineration systems encompass both batch load and continuous feed, static, stepped-hearth and rotary systems for incineration of many waste types, as well as equipment for in-loading waste, out-loading ash and energy recovery.
The business is globally active with well-established customer relations. 5 ITEM 1. BUSINESS, (continued) The energy storage solutions business has experienced significant growth primarily reflecting increasing demand for electric vehicles, as well as the expansion of renewable energy production globally. The segment has nearly a decade of experience in developing dry electrode battery solutions.
The business is globally active with well-established customer relations. 5 ITEM 1. BUSINESS, (continued) The energy storage solutions business has grown over the last few years, primarily reflecting demand for batteries for use in electric vehicles. The segment has over a decade of experience in developing dry electrode battery solutions.
The Company has a trained global change network embedded in the business to support transformational projects to help realize the goals and benefits of organizational changes. Health and Safety: Employee health and safety in the workplace remains the Company’s highest priority and is one of the Company’s core values.
The Company has a trained global change network embedded in the business to support transformational projects to help realize the goals and benefits of organizational changes. Environmental, Health and Safety: The Company’s leadership team is committed to integrating Environmental, Health, and Safety ("EHS") principles into the Company's business strategy and operations, as it is one of the Company’s core values.
The segment competes in an industry that is constantly challenged by emerging technologies that impact packaging and marketing. These challenges can create new opportunities for the segment to create, produce and manage large volumes of brand content.
The segment competes in an industry that is constantly challenged by emerging technologies that impact packaging and marketing. These challenges have created new opportunities for the segment to create, produce and manage large volumes of brand content in an automated manner, which has generated incremental revenues from standalone software-as-a-service (“SaaS”) sales.
The energy storage solutions business produces engineered calendering, laminating, and coating equipment used in the manufacturing of lithium-ion batteries and components of fuel cells. The segment currently delivers products to several major vehicle producers and is actively pursuing opportunities with several other electric vehicle and tier-one battery manufacturers.
The energy storage solutions business produces engineered calendering, laminating, and coating equipment used in the manufacturing of lithium-ion batteries and components of fuel cells. The segment currently delivers products to major vehicle producers and tier 1 battery manufacturers. The segment also offers service, spare parts, calender- and coating-roller refurbishing and retrofits of complete production lines.
As a global company, adjustments are made for global and regional market demands. 8 ITEM 1. BUSINESS, (continued) Talent Development/Management: From onboarding to leadership development, Matthews believes investing in its people leads to greater success.
The Company evaluates roles to ensure pay is at market rate, and offers annual incentive pay and a competitive benefit package. As a global company, adjustments are made for global and regional market demands. Talent Management: From onboarding to leadership development, Matthews believes that investing in its people leads to greater success.
As such, the Company's future success depends in part on its ability to grow sales in non-U.S. markets. Sales and operations outside of the United States are subject to certain inherent risks. The Company anticipates that future sales to international customers will continue to account for a significant percentage of its revenues.
In addition, the Company's manufacturing operations, suppliers and employees are located in many places around the world. As such, the Company's future success depends in part on its ability to grow sales in non-U.S. markets. Sales and operations outside of the United States are subject to certain inherent risks.
The Company also markets turnkey cremation gardens that include design and all related products for a cremation memorial garden. Customers of the Memorialization segment can purchase memorials and vases on a "pre-need" basis. This concept permits families to arrange for these purchases in advance of their actual need.
Manufactured bronze and granite niche units are comprised of numerous compartments used to display cremation urns in mausoleums and churches. The Company also markets turnkey cremation gardens that include design and all related products for a cremation memorial garden. Customers of the Memorialization segment can purchase memorials and vases on a "pre-need" basis.
The Company believes this investment, which includes classroom learning, external assessments, coaching/mentoring, and project application, both prepares and strengthens the organization for the future, while deepening the commitment of its top talent. Performance Management: Connecting employees to the strategy ensures individual effort to a larger goal and strengthens commitment to the organization.
The Company believes this investment, which includes classroom learning, assessments, coaching/mentoring and real time strategic project application, both strengthens the organization for the future, while deepening the commitment of its top talent with prepared, ready talent to assume senior roles.
The Memorialization segment manufactures a full line of cremation-related products, including cremation urns in a variety of sizes, styles and shapes as well as standard and custom designed granite cremation pedestals and benches. Manufactured bronze and granite niche units are comprised of numerous compartments used to display cremation urns in mausoleums and churches.
Principal customers for memorial products are cemeteries, memorial parks and monument dealers, which in turn sell the Company's products to the consumer. The Memorialization segment sells a full line of cremation-related products, including cremation urns in a variety of sizes, styles and shapes, as well as standard and custom designed granite cremation pedestals and benches.
Human crematory management/operations represent the actual operation and management of client-owned crematories. Currently the segment provides these services primarily to municipalities and private operators in Europe. Cremation service and supplies consist of operator training, preventative maintenance and on-demand service work performed on various makes and models of equipment.
Human crematory management/operations represent the actual operation and management of client-owned crematories. Cremation service and supplies consist of operator training, preventative maintenance and on-demand service work performed on various makes and models of equipment. This work can be as simple as replacing defective bulbs or as complex as complete reconstruction and upgrading or retrofitting on site.
Matthews is a unique organization, diverse in culture, talent and geography. The Company stands committed to a culture reflecting the people, clients, customers, and communities it serves. Talent Acquisition and Total Rewards: To continue to grow and compete in a highly competitive labor market, Matthews works hard to attract and select top talent through a compelling employment value proposition.
Talent Acquisition and Total Rewards: To continue to grow and compete in a highly competitive labor market, Matthews works hard to attract and select top talent through a compelling employment value proposition. The Company’s employment brand highlights its values including innovation, commitment to people culture, diversity, equity and inclusion, employee growth, and wellbeing.
Matthews understands the highly competitive market for talent and believes that to attract and retain top talent, it must offer competitive pay and benefit programs. The Company evaluates roles to ensure pay is at market rate, and offers annual incentive pay and a competitive benefit package.
The Company’s selection process includes key behavioral questions that help select the right people for the right roles which helps ensure cultural alignment. Matthews understands the highly competitive market for talent and believes that to attract and retain top talent, it must offer competitive pay and benefit programs.
Matthews has implemented a robust talent review process that identifies critical talent and serves as the basis for succession planning. Each year, at the conclusion of this review, the executive team selects a cohort of critical talent by level to participate in comprehensive leadership programs designed to prepare leaders for enterprise roles.
The outputs of this annual process are presented first to the executive team, who then selects a cohort of future leaders to participate in comprehensive leadership programs designed to prepare leaders for enterprise roles, and then presented to the Matthews Board of Directors.
Removed
This work can be as simple as replacing defective bulbs or as complex as complete reconstruction and upgrading or retrofitting on site. Supplies are consumable items and replacement parts associated with normal crematory operations.
Added
Matthews’ global D&I Council, representative of the Company's diverse workforce from all businesses, regions and cultures, along with multiple local councils and Employee Resource Groups (“ERGs”) focus on priorities across four key pillars: Infrastructure, Employee Engagement, Talent Acquisition, and Community.
Removed
The segment also offers service, spare parts, calender- and coating-roller refurbishing and retrofits of complete production lines.
Added
Aligned and designed to optimize the Company's HR Strategy, the D&I programming embraces, encourages and enhances Matthews as a unique organization, diverse in culture, talent and geography. The Company stands committed to a culture reflecting the people, clients, customers, and communities it serves.
Removed
Matthews’ D&I strategy focuses on priorities across seven key areas including: Talent Acquisition, Employee Engagement, Learning and Awareness, Supplier Diversity, Connection to Customers, Normalizing Courageous Conversations, and Community Engagement.
Added
Matthews’ globally accessible learning hub is a gateway to personal growth and professional development that allows employees to: • Explore personalized learning opportunities tailored to specific needs and career aspirations. • Access a wide range of learning resources on-demand, designed to help prepare employees to meet career aspirations. • Discover diverse career paths and build the right skills aligned with goals through high-quality content from a variety of sources. • Enhance skill sets to stay innovative and adaptable in an ever-evolving technological landscape.
Removed
A global council representative of a diverse workforce exists to help shape plans and program priorities, and seven additional councils across the organization support the program within local/regional markets to champion the work. A full time D&I leader is actively focused on driving the overarching program and building progress across all seven focus areas.
Added
Matthews is committed to fostering a culture of continuous learning and development, ensuring all employees have the resources and support they need to succeed. Succession Management: The Company’s future success depends upon tomorrow’s leaders.
Removed
The Company’s employment brand highlights its values including innovation, commitment to people culture, diversity, equity and inclusion, employee development, and wellbeing. The Company's selection process includes key behavioral questions that help select the right people for the right roles which helps to ensure cultural alignment.
Added
Succession Planning for senior leaders is a key focus area built on the foundation of a structured talent review process for identifying the key roles critical to future success, and the key talent to achieve success.
Removed
Matthews’ competency-based learning center helps employees select learning programs to continue their growth, and the Company facilitates both formal and informal mentoring that reinforces and supports its leaders during key developmental periods and beyond. The Company’s future success depends upon tomorrow’s leaders.
Added
Performance Management: Connecting employees to the Company's strategy ensures individual effort to a larger goal and strengthens commitment to the organization.
Removed
Safety efforts are led by the global health and safety team and supported by individuals at the local site level. Hazards in the workplace are timely identified and management actively tracks incidents so remedial actions may be implemented to improve workplace safety. BACKLOG: The Company's current backlog is expected to be substantially filled in fiscal 2024.
Added
Matthews continually improves its EHS management system and performance by setting measurable EHS objectives and targets, regularly reviewing progress, and implementing corrective actions when necessary. A safe and healthy work environment can only be achieved through active participation. Employees at all levels are encouraged and empowered to report hazards, participate in safety programs, and suggest improvements.
Added
The Company anticipates that future sales to international customers will continue to account for a significant percentage of its revenues.
Added
The impact of these risks is difficult to predict, but the occurrence of one or more of them could have a material adverse effect on the Company’s financial position, results of operations, or cash flows. Changes in foreign currency exchange rates could have an adverse effect on the Company's revenue, cash flows and financial results.
Added
Production and sales of a significant portion of the Company's products are outside the United States, and accordingly, the Company holds assets, incurs liabilities, earns revenue and pays expenses in a variety of currencies.
Added
The Company's consolidated financial statements are presented in U.S. dollars, and therefore, the Company must translate the reported values of its foreign assets, liabilities, revenue and expenses into U.S. dollars.
Added
Increases or decreases in the value of the U.S. dollar compared to foreign currencies may negatively affect the value of these items in the Company's consolidated financial statements, even though their value has not changed in local currency.
Added
Interest rate fluctuations could increase the Company's financing costs and reduce the Company's ability to obtain additional indebtedness or debt refinancing, which could materially and adversely affect the Company. Interest rate fluctuations could increase the Company's financing costs to the extent such interest rates are not hedged.
Added
In addition, increases in interest rates could limit the Company's ability to obtain additional indebtedness or debt refinancing on terms that the Company deems attractive, or at all, which could have a material and adverse effect on the Company's borrowing costs, profitability, liquidity and capital resources.
Added
Borrowings under the Company’s credit facilities, including the domestic credit facility, are subject to variable rates of interest and expose the Company to interest rate risk. The Company enters into interest rate swaps in order to achieve a mix of fixed and variable rate debt that it deems appropriate.
Added
To the extent that some or all of the Company’s variable interest rate debt is not subject to interest rate swaps, if interest rates were to increase, the Company’s interest expense would increase, negatively affecting earnings and reducing cash flows available for working capital, capital expenditures and other investments.
Added
The Company also has $300.0 million 8.625% senior secured second lien notes due October 1, 2027 (the "2027 Senior Secured Notes").
Added
In the event the Company seeks to refinance indebtedness under the domestic credit facility or the 2027 Senior Secured Notes, or obtain additional financing, higher interest rates may limit the Company’s ability to incur such indebtedness on terms that it deems attractive, if at all.
Added
If the Company is unable to incur indebtedness on terms that it deems attractive, it could have a material and adverse effect on the Company’s borrowing costs, profitability, liquidity and capital resources. Increased prices for raw materials or shortages could adversely affect the Company's results of operations and cash flows.
Added
The Company's profitability is affected by the prices of the raw materials used in the manufacture of its products. These prices may fluctuate based on a number of factors, including changes in supply and demand, domestic and global economic conditions, volatility in commodity markets, currency exchange rates, labor costs, tariffs and fuel-related costs.
Added
If suppliers increase the price of critical raw materials, alternative sources of supply, or alternative materials, may not exist or be readily available. In addition, disruptions in the global supply chain may cause prices for raw materials to increase.
Added
See "The Company faces additional global supply chain risks and risks of interruption of requisite logistics and transportation services, including as a result of the Company's reliance on limited suppliers and vendors for certain components, materials, and services." The Company has standard selling price structures (i.e., list prices) in certain of its segments, which are reviewed for adjustment generally on an annual basis.
Added
In addition, the Company has established pricing terms with several of its customers through contracts or similar arrangements. Based on competitive market conditions and to the extent that the Company has established pricing terms with customers, the Company's ability to immediately increase the price of its products to offset the increased costs may be limited.
Added
Significant raw material price increases that cannot be mitigated by selling price increases or productivity improvements will negatively affect the Company's results of operations. 11 ITEM 1A. RISK FACTORS, (continued) The Company's balance sheet includes a significant amount of goodwill and intangible assets.
Added
An impairment in the carrying value of goodwill could negatively impact the Company's consolidated results of operations and total assets.
Added
The Company has recorded a significant amount of goodwill and intangible assets in its consolidated financial statements resulting from acquisition activities and has in the past recorded, and may in the future record, significant charges for impairment of goodwill and intangible assets. The Company tests, at least annually, the carrying value of goodwill for impairment.
Added
The estimates and assumptions about future results of operations and cash flows made in connection with the impairment testing could differ from future actual results of operations and cash flows.
Added
For example, during the fiscal years ended September 30, 2024 and 2022, Matthews recorded a $16.7 million goodwill write-down with respect to its Surfaces and Engineering reporting unit and an $82.5 million goodwill write-down with respect to its SGK Brand Solutions reporting unit, respectively.
Added
See Note 23, "Goodwill and Other Intangible Assets" in Item 8 - “Financial Statements and Supplementary Data” for further details.
Added
If Matthews concludes that any further goodwill or intangible asset values are impaired, for reasons that may include, but are not limited to, underperformance in one or more reporting segments against forecast levels; changes in the Company’s business strategy, structure, and/or the allocation of resources; the inability of acquisitions to achieve expected operating results; a decline in the Company’s stock price for a sustained period; a potential recession or other disruption; or interest rate increases or other factors, any resulting non-cash impairment charge could have a material adverse effect on Matthews’ business, results of operations and financial condition.
Added
Changes in mortality and cremation rates could have a material adverse effect on the Company's cash flows and revenues.
Added
Generally, life expectancy in the United States and other countries in which the Company's Memorialization segment operates has increased steadily for several decades and is expected to continue to do so in the future, absent events related to pandemics or similar outbreaks. The increase in life expectancy is also expected to impact the timing of deaths in the future.
Added
Additionally, cremations have steadily grown as a percentage of total deaths in the United States since the 1960's, and are expected to continue to increase in the future.
Added
The Company expects that these trends will continue in the future and sales of the Company's Memorialization segment may benefit from the continued growth in the number of cremations; however, such trends may adversely affect the volume of bronze and granite memorialization products and burial caskets sold in the United States.
Added
The Company is subject to competitive pressures, including with respect to product demand and pricing. The Company's businesses have and will continue to operate in competitive markets. Changes in product demand or pricing are affected by domestic and foreign competition and an increase in consolidated purchasing by large customers operating in both domestic and global markets.
Added
The Memorialization businesses generally operate in markets with ample supply capacity and demand which is correlated to death rates. The SGK Brand Solutions businesses serve global customers that are requiring their suppliers to be global in scope and price-competitive.
Added
Additionally, in recent years the Company has witnessed an increase in products manufactured offshore, primarily in China, and imported into the Company's U.S. markets. It is expected that these trends will continue and may affect the Company's future results of operations.
Added
The loss of any of the Company's large customers could have a material adverse effect on the Company's cash flows and results of operations. Although the Company does not have any customer that is individually significant to consolidated sales, it does have contracts with several large customers in each of its business segments.
Added
While these contracts provide important access to large purchasers of the Company's products, they can obligate the Company to sell products at contracted prices for extended periods of time, or, in the event of a dispute with a large customer, cause disruptions to the units sold to such customer, if any.
Added
Additionally, any significant divestiture of business properties or operations by current customers could result in a loss of business if the Company is not able to maintain the business with the subsequent owners of the businesses.
Added
The Company faces additional global supply chain risks and risks of interruption of requisite logistics and transportation services, including as a result of the Company's reliance on limited suppliers and vendors for certain components, materials, and services.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

18 edited+7 added−65 removed22 unchanged
Biggest changeThese and other economic factors could have an effect on demand for the Company's products and services and negatively impact the Company's financial condition and results of operations. Labor shortages, turnover and labor cost increases. Labor is a significant component of the Company's operations.
Biggest changeOther factors that could influence customer spending include energy costs, conditions in the credit markets, consumer confidence, global pandemics, and other factors affecting consumer spending behavior. These and other economic factors could have an effect on demand for the Company's products and services and negatively impact the Company's financial condition and results of operations.
Further, the Company is subject to laws and regulations worldwide affecting its operations outside the United States in areas including, but not limited to, intellectual property ownership and infringement, tax, customs, import and export requirements, economic sanctions, anti-money laundering, anti-corruption and anti-bribery, foreign exchange controls and cash repatriation restrictions, foreign investment, data privacy requirements, anti-competition, pensions and social insurance, employment, and environment, health, and safety.
RISK FACTORS, (continued) Further, the Company is subject to laws and regulations worldwide affecting its operations outside the United States in areas including, but not limited to, intellectual property ownership and infringement, tax, customs, import and export requirements, economic sanctions, anti-money laundering, anti-corruption and anti-bribery, foreign exchange controls and cash repatriation restrictions, foreign investment, data privacy requirements, anti-competition, pensions and social insurance, employment, and environment, health, and safety.
Reliance on Third-Party Service Providers. The Company has entered into agreements with a variety of third-party providers for information technology services, including telecommunications, network server maintenance, cloud computing and transaction processing services. In addition, Matthews has agreements through which it has outsourced certain activities related to the operations of the Company’s business segments.
The Company has entered into agreements with a variety of third-party providers for information technology services, including telecommunications, network server maintenance, cloud computing and transaction processing services. In addition, Matthews has agreements through which it has outsourced certain activities related to the operations of the Company’s business segments.
Such conduct, or even the allegation thereof, could result in costly investigations and the imposition of severe criminal or civil sanctions, could disrupt the Company's business, and could materially and adversely affect the Company's reputation, business and results of operations or financial condition.
Such conduct, or even the allegation thereof, could result in costly investigations and the imposition of severe criminal or civil sanctions, could disrupt the Company's business, and could materially and adversely affect the Company's reputation, business and results of operations or financial condition. 15 ITEM 1A.
Additionally, while the Company has policies and procedures for managing these relationships, they inherently involve a lesser degree of control over business operations, governance and compliance, thereby potentially increasing the profiles of Matthews’ financial, legal, reputational and operational risks. Technological Factors Beyond the Company's Control.
Additionally, while the Company has policies and procedures for managing these relationships, they inherently involve a lesser degree of control over business operations, governance and compliance, thereby potentially increasing the profiles of Matthews’ financial, legal, reputational and operational risks.
In addition, certain laws and regulations are relatively new and their interpretation and enforcement involve significant uncertainties. There can be no assurance that any of these factors will not have a material adverse effect on the Company's business, results of operations or financial condition. General Risk Factors: Changes in Economic Conditions.
In addition, certain laws and regulations are relatively new and their interpretation and enforcement involve significant uncertainties. There can be no assurance that any of these factors will not have a material adverse effect on the Company's business, results of operations or financial condition.
Any such developments may subject Matthews to material fines and other monetary penalties and damages, divert management’s time and attention, and lead to enhanced regulatory oversight, all of which could have a material adverse effect on the Company’s business and results of operations. Effectiveness of Internal Controls.
Any such developments may subject Matthews to material fines and other monetary penalties and damages, divert management’s time and attention, and lead to enhanced regulatory oversight, all of which could have a material adverse effect on the Company’s business and results of operations. 16 ITEM 1A.
There can be no assurance that the Company’s efforts will meet the evolving standards imposed by governmental and regulatory agencies, including data protection authorities, with respect to standards that may be adopted in 15 ITEM 1A. RISK FACTORS, (continued) the future.
There can be no assurance that the Company’s efforts will meet the evolving standards imposed by governmental and regulatory agencies, including data protection authorities, with respect to standards that may be adopted in the future.
Due to the international scope of the Company's operations, Matthews is subject to a complex system of commercial and trade regulations around the world, and the Company's foreign operations are governed by laws, rules and business practices that often differ from those of the United States.
Non-compliance could subject the Company to sanctions and materially adversely affect the Company's business. Due to the international scope of the Company's operations, Matthews is subject to a complex system of commercial and trade regulations around the world, and the Company's foreign operations are governed by laws, rules and business practices that often differ from those of the United States.
The GDPR and the CCPA contain comprehensive data protection compliance requirements. Complying with the GDPR and the CCPA may continue to cause the Company to incur substantial operational costs or require the Company to change certain of its business practices in certain jurisdictions.
Complying with the GDPR and the CCPA may continue to cause the Company to incur substantial operational costs or require the Company to change certain of its business practices in certain jurisdictions.
Changes in Laws and Regulations Governing Data Privacy and Data Protection . The Company is subject to many data privacy, data protection, and data breach notification laws, including the GDPR, which became effective in May of 2018, and the California Consumer Privacy Act (the "CCPA"), which became effective in January 2020.
The Company is subject to many data privacy, data protection, and data breach notification laws, including the GDPR, which became effective in May of 2018, and the California Consumer Privacy Act (the "CCPA"), which became effective in January 2020. The GDPR and the CCPA contain comprehensive data protection compliance requirements.
If the Company cannot produce reliable financial reports, investors could lose confidence in the Company's reported financial information, the market price of the Company's common stock could decline significantly, and its business, financial condition, and reputation could be harmed. Compliance with Securities Laws and Regulations; Conflict Minerals Reporting.
If the Company cannot produce reliable financial reports, investors could lose confidence in the Company's reported financial information, the market price of the Company's Class A Common Stock could decline significantly, and its business, financial condition, and reputation could be harmed.
An overall labor shortage, lack of skilled labor, increased turnover, or labor inflation, caused by pandemics or as a result of general macroeconomic factors, could have a material adverse impact on the Company’s business and operating results. Cybersecurity and Data Breaches. In the course of business, the Company collects and stores sensitive data and proprietary business information.
An overall labor shortage, lack of skilled labor, increased turnover, or labor inflation, caused by pandemics or as a result of general macroeconomic factors, could have a material adverse impact on the Company’s business and operating results. The Company relies on information technology to operate the Company's business.
The Company is required to comply with various securities laws and regulations, including but not limited to the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank").
The Company's efforts to comply with Dodd-Frank and other evolving laws and regulations could result in increased costs and expenses related to compliance and potential violations. The Company is required to comply with various securities laws and regulations, including but not limited to the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank").
The Company operates in certain markets in which technological product development contributes to its ability to compete effectively. There can be no assurance that the Company will be able to develop new products, that new products can be manufactured and marketed profitably, or that new products will successfully meet the expectations of customers.
There can be no assurance that the Company will be able to develop new products, that new products can be manufactured and marketed profitably, or that new products will successfully meet the expectations of customers.
The Company has applied available guidance to estimate its tax obligations, but new guidance may cause the Company to make adjustments to its tax estimates in future periods. 14 ITEM 1A. RISK FACTORS, (continued) Compliance with Foreign Laws and Regulations.
Department of Treasury has broad authority to issue regulations and interpretive guidance. The Company has applied available guidance to estimate its tax obligations, but new guidance may cause the Company to make adjustments to its tax estimates in future periods. The Company operates in a regulated environment that requires the Company's compliance with laws and regulations.
Generally, changes in domestic and international economic conditions affect the industries in which the Company and its customers and suppliers operate. These changes include changes in the rate of consumption or use of the Company's products due to economic downturns, volatility in currency exchange rates, and changes in raw material prices resulting from supply and/or demand conditions.
These changes include changes in the rate of consumption or use of the Company's products due to economic downturns, volatility in currency exchange rates, and changes in raw material prices resulting from supply and/or demand conditions. Uncertainty about current global economic conditions poses a risk, as consumers and businesses may continue to postpone or cancel spending.
Changes in Tax Rules. Matthews is subject to domestic and international tax laws and cannot predict the scope or effect of future tax law changes. Domestically, the U.S. Department of Treasury has broad authority to issue regulations and interpretive guidance.
Future tax law changes and/or interpretation of existing tax laws may adversely affect the Company's effective income tax rate and require adjustments to the Company's tax estimates. Matthews is subject to domestic and international tax laws and cannot predict the scope or effect of future tax law changes. Domestically, the U.S.
Removed
ITEM 1A. RISK FACTORS, (continued) The impact of these risks is difficult to predict, but the occurrence of one or more of them could have a material adverse effect on the Company’s financial position, results of operations, or cash flows. Changes in Foreign Currency Exchange Rates .
Added
ITEM 1A. RISK FACTORS, (continued) The Company relies on third parties and their systems for a variety of services, including significant information technology services, and the failure of these third parties to provide these services could disrupt the Company's business.
Removed
Production and sales of a significant portion of the Company's products are outside the United States, and accordingly, the Company holds assets, incurs liabilities, earns revenue and pays expenses in a variety of currencies.
Added
If the Company is unable to keep pace with technological changes, some of which are beyond the Company's control, the Company may not be able to maintain the Company's competitive position. The Company operates in certain markets in which technological product development contributes to its ability to compete effectively.
Removed
The Company's consolidated financial statements are presented in U.S. dollars, and therefore, the Company must translate the reported values of its foreign assets, liabilities, revenue and expenses into U.S. dollars.
Added
Changing laws and regulations relating to privacy, information security and data protection could increase the Company's costs, and the failure to comply with such laws and regulations could result in significant business disruptions, litigation or enforcement actions.
Removed
Increases or decreases in the value of the U.S. dollar compared to foreign currencies may negatively affect the value of these items in the Company's consolidated financial statements, even though their value has not changed in local currency. Changes in Interest Rates .
Added
General Risk Factors: The Company's business is affected by general economic conditions, and any economic decline or other circumstances that result in reductions in the Company's customers’ spending could negatively impact the Company's sales volume and revenues. Generally, changes in domestic and international economic conditions affect the industries in which the Company and its customers and suppliers operate.
Removed
Interest rate fluctuations could increase the Company's financing costs to the extent such interest rates are not hedged.
Added
The Company's results of operations could be adversely affected by labor shortages, turnover and labor cost increases. Labor is a significant component of the Company's operations.
Removed
In addition, increases in interest rates could limit the Company's ability to obtain additional indebtedness or debt refinancing on terms that the Company deems attractive, or at all, which could have a material and adverse effect on the Company's borrowing costs, profitability, liquidity and capital resources.
Added
Security breach incidents and breakdowns of information technologies, or failure to comply with laws governing data privacy and data protection, could disrupt the Company's operations, subject the Company to legal claims, and impact the Company's financial results. In the course of business, the Company collects and stores sensitive data and proprietary business information.
Removed
Borrowings under the Company’s credit facilities, including the domestic credit facility, are subject to variable rates of interest and expose the Company to interest rate risk. The Company enters into interest rate swaps in order to achieve a mix of fixed and variable rate debt that it deems appropriate.
Added
RISK FACTORS, (continued) If the Company fails to maintain effective internal controls over financial reporting at a reasonable assurance level, the Company may not be able to accurately report the Company's financial results, and may require the restatement of previously published financial information, which could have a material adverse effect on the Company's operations, investor confidence in the Company's business and the trading price of the Company's securities.
Removed
To the extent that some or all of the Company’s variable interest rate debt is not subject to interest rate swaps, if interest rates were to increase, the Company’s interest expense would increase, negatively affecting earnings and reducing cash flows available for working capital, capital expenditures and other investments.
Removed
The Company also has $299.6 million 5.25% senior unsecured notes due December 1, 2025 (the “2025 Senior Notes”).
Removed
In the event the Company seeks to refinance indebtedness under the domestic credit facility or the 2025 Senior Notes, or obtain additional financing, higher interest rates may limit the Company’s ability to incur such indebtedness on terms that it deems attractive, if at all.
Removed
If the Company is unable to incur indebtedness on terms that it deems attractive, it could have a material and adverse effect on the Company’s borrowing costs, profitability, liquidity and capital resources. Increased Prices for Raw Materials. The Company's profitability is affected by the prices of the raw materials used in the manufacture of its products.
Removed
These prices may fluctuate based on a number of factors, including changes in supply and demand, domestic and global economic conditions, volatility in commodity markets, currency exchange rates, labor costs, tariffs and fuel-related costs. If suppliers increase the price of critical raw materials, alternative sources of supply, or alternative materials, may not exist or be readily available.
Removed
In addition, disruptions in the global supply chain may cause prices for raw materials to increase. See "Disruptions to the global supply chain." The Company has standard selling price structures (i.e., list prices) in certain of its segments, which are reviewed for adjustment generally on an annual basis.
Removed
In addition, the Company has established pricing terms with several of its customers through contracts or similar arrangements. Based on competitive market conditions and to the extent that the Company has established pricing terms with customers, the Company's ability to immediately increase the price of its products to offset the increased costs may be limited.
Removed
Significant raw material price increases that cannot be mitigated by selling price increases or productivity improvements will negatively affect the Company's results of operations. Impairment of Goodwill and Intangible Assets.
Removed
The Company has recorded a significant amount of goodwill and intangible assets in its consolidated financial statements resulting from acquisition activities and has in the past recorded, and may in the future record, significant charges for impairment of goodwill and intangible assets. The Company tests, at least annually, the carrying value of goodwill for impairment.
Removed
The estimates and assumptions about future results of operations and cash flows made in connection with the impairment testing could differ from future actual results of operations and cash flows. For example, during the fiscal year ended September 30, 2022, Matthews recorded an $82.5 million goodwill write-down with respect to its SGK Brand Solutions reporting unit.
Removed
See Note 22, "Goodwill and Other Intangible Assets" in Item 8 - “Financial Statements and Supplementary Data” for further details.
Removed
If Matthews concludes that any further goodwill or intangible asset values are impaired, for reasons that may include, but are not limited to, underperformance in one or more reporting segments against forecast levels; changes in the Company’s business strategy, structure, and/or the allocation of resources; the inability of acquisitions to achieve expected operating results; a decline in the Company’s stock price for a sustained period; a potential recession or other disruption; or interest rate increases or other factors, any resulting non-cash impairment charge could have a material adverse effect on Matthews’ business, results of operations and financial condition.
Removed
Changes in Mortality and Cremation Rates. Generally, life expectancy in the United States and other countries in which the Company's Memorialization segment operates has increased steadily for several decades and is expected to continue to do so in the future, absent events related to pandemics or similar outbreaks.
Removed
The increase in life expectancy is also expected to impact the number of deaths in the future. Additionally, cremations have steadily grown as a percentage of total deaths in the United States since the 1960's, and are expected to continue to increase in the future. The Company expects that these trends will 11 ITEM 1A.
Removed
RISK FACTORS, (continued) continue in the future and sales of the Company's Memorialization segment may benefit from the continued growth in the number of cremations; however, such trends may adversely affect the volume of bronze and granite memorialization products and burial caskets sold in the United States. Changes in Product Demand or Pricing.
Removed
The Company's businesses have and will continue to operate in competitive markets. Changes in product demand or pricing are affected by domestic and foreign competition and an increase in consolidated purchasing by large customers operating in both domestic and global markets. The Memorialization businesses generally operate in markets with ample supply capacity and demand which is correlated to death rates.
Removed
The SGK Brand Solutions businesses serve global customers that are requiring their suppliers to be global in scope and price-competitive. Additionally, in recent years the Company has witnessed an increase in products manufactured offshore, primarily in China, and imported into the Company's U.S. markets.
Removed
It is expected that these trends will continue and may affect the Company's future results of operations. Changes in the Distribution of the Company's Products or the Loss of a Large Customer.
Removed
Although the Company does not have any customer that is individually significant to consolidated sales, it does have contracts with several large customers in each of its business segments.
Removed
While these contracts provide important access to large purchasers of the Company's products, they can obligate the Company to sell products at contracted prices for extended periods of time, or, in the event of a dispute with a large customer, cause disruptions to the units sold to such customer, if any.
Removed
Additionally, any significant divestiture of business properties or operations by current customers could result in a loss of business if the Company is not able to maintain the business with the subsequent owners of the businesses. Disruptions to the global supply chain.
Removed
The Company purchases components and materials to manufacture its products from a large number of suppliers, some of which may be critical to operations. The Company’s product offerings are impacted by such suppliers' lead times, volume constraints and increasing costs.
Removed
The Company has experienced and may continue to experience extended lead times and product unavailability due to manufacturing disruptions or closures as well as delays and unanticipated costs associated with the sourcing of materials. Matthews’ supply chain operations span several geographies globally and are heavily dependent upon third party logistics and transportation services to deliver the Company’s products to customers.
Removed
Extended lead times and shortages could impair the Company’s ability to meet its customer requirements, require the Company to pay higher prices or incur expedite fees or cause its customers to delay or forgo projects, which would harm Matthews’ business and negatively impact the Company’s gross margin and results of operations. Pandemics or similar outbreaks.
Removed
Pandemics or similar outbreaks could adversely affect the economies of developed and emerging markets, potentially resulting in an economic downturn that could affect customers’ demand for the Company’s products and services, as well as the Company's ability to access capital at acceptable interest rates.
Removed
The spread of pandemics or similar outbreaks may also disrupt the Company’s manufacturing and production operations, as well as its distribution systems, which include import and export for delivery of the Company’s products to its customers. These factors could materially and adversely affect the Company’s business, financial condition and results of operations.
Removed
See also "Disruptions to the global supply chain." Due to the uncertainty relating to a pandemic or similar outbreak, the Company, its customers or its suppliers may be required, or believe that it is advantageous, to take precautionary measures intended to minimize the risk of a virus or disease spreading to employees, customers, and the communities in which they operate, and these measures could negatively impact the Company’s business.
Removed
Further, if the scope and severity of an outbreak worsens and the Company’s contingency plans prove ineffective, its global operations could potentially experience disruptions, such as temporary closure of facilities or delays or suspensions in product offerings and services, which may materially and adversely affect the Company’s business, financial condition and results of operations.
Removed
Global conflicts may impact the business of the Company and the markets in which it operates. Global conflicts, such as the war in Ukraine, could impact the Company and its operations in a number of different ways, which are yet to be fully assessed and are therefore uncertain.
Removed
The Company’s principal concern is for the safety of its employees and other personnel, specifically those who are based in the affected region. The Company has employees who are based in Eastern Europe, including Russia and Ukraine, who may be affected by the ongoing hostilities. The Company additionally has property, plant and equipment in or around the affected region.
Removed
The continuing impact of this war and the response of the United States and other countries to it by means of trade and economic sanctions, or other actions, is still evolving and unknown; however it could disrupt the Company’s ability to work with certain parties.
Removed
Similarly, the Company has employees based in the affected region and works with third-party providers from other parts of the world that may be affected by hostilities.
Removed
Due to the uncertainty relating to war or similar conflicts, the current war between Russia and Ukraine may adversely affect the Company's business, of which could materially and adversely affect the Company's results of operations. Such risks include, 12 ITEM 1A.
Removed
RISK FACTORS, (continued) but are not limited to, adverse effects on macroeconomic conditions, including inflation and business and consumer spending; disruptions to the Company's global technology infrastructure, including through cyberattack, ransom attack, or cyber-intrusion; adverse changes in international trade policies and relations; disruptions in global supply chains; exposure to foreign currency fluctuations; and constraints, volatility, or disruption in the capital markets.
Removed
Similar uncertainties may arise in connection with other ongoing hostilities or future hostilities.
Removed
For so long as the hostilities continue, and perhaps even thereafter as the situation unfolds, the Company may see increased volatility in financial markets, which may impact equity markets generally, including the Company’s stock price, and make it more difficult for the Company to raise additional capital at a strategically advantageous time, or for financing to be available upon acceptable terms.
Removed
All or any of these risks separately, or in combination could have a material adverse effect on the Company's business, financial condition, results of operations, and cash flows. Risks in Connection with Acquisitions and Divestitures .
Removed
The Company has grown, in part, through acquisitions and continues to evaluate acquisition or divestiture opportunities that have the potential to support and strengthen its businesses. There is no assurance, however, that future acquisition opportunities will arise, or that if they do, that they will be consummated.
Removed
In addition, acquisitions and divestitures involve inherent risks that the businesses acquired, or the remaining business, will not perform in accordance with expectations, or that synergies expected from the integration of an acquisition will not be achieved as rapidly as expected, or at all.
Removed
The Company's pre-acquisition diligence review may not discover or accurately quantify certain undisclosed liabilities, and the Company may not be indemnified for such liabilities which could have an adverse effect on the acquired business.
Removed
Failure to effectively integrate acquired businesses could prevent the realization of expected rates of return on the acquisition investment, including the achievement of cost-reduction objectives, and could have a negative effect on the Company's results of operations and financial condition. Protection of Intellectual Property.
Removed
Certain of the Company's businesses rely on various intellectual property rights, including patents, copyrights, trademarks and trade secrets, as well as confidentiality provisions and licensing arrangements, to establish proprietary rights. If the Company does not enforce, or is unsuccessful in enforcing, its intellectual property rights successfully, its competitive position may suffer, which could harm the Company's operating results.
Removed
In addition, the Company's patents, copyrights, trademarks and other intellectual property rights, including its trade secrets, may not provide a significant competitive advantage. The Company may need to spend significant resources monitoring its intellectual property rights and may or may not be able to detect infringement by third parties.
Removed
The Company's competitive position may be harmed if it cannot detect infringement and enforce its intellectual property rights quickly or at all. In some circumstances, the Company may choose to not pursue enforcement because an infringer has a dominant intellectual property position or for other business reasons, such as the expense of litigation against a well-resourced adversary.
Removed
In addition, competitors might avoid infringement by designing around the Company's intellectual property rights or by developing non-infringing competing technologies. Intellectual property rights and the Company's ability to enforce them may be unavailable or limited in some countries which could make it easier for competitors to capture market share and could result in lost revenues.
Removed
Intellectual property infringement assertions by third parties could result in significant costs and adversely affect the Company's business, financial condition, operating results and reputation.
Removed
The Company cannot guarantee that the operation of its business does not infringe, misappropriate or otherwise violate the intellectual property rights of third parties, nor can the Company assure that third parties will not assert claims, meritorious or otherwise.
Removed
The Company cannot predict whether other assertions of third-party intellectual property rights or claims arising from such assertions would substantially adversely affect the Company's business, financial condition and operating results.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeSignificant principal properties of the Company and its majority-owned subsidiaries as of October 31, 2023 were as follows (properties, which are unencumbered, are owned by the Company except as noted): Location Description of Property Memorialization: Pittsburgh, PA Manufacturing / Division Offices Apopka, FL Manufacturing / Division Offices Aurora, IN Manufacturing Colorno, Italy Manufacturing Dallas, TX Distribution Hub (1) Dandenong, Australia Manufacturing (1) Elberton, GA Manufacturing Fontana, CA Distribution Hub (1) Harrisburg, PA Distribution Hub (1) Indianapolis, IN Distribution Hub (1) Monterrey, Mexico Manufacturing (1) Richmond, IN Manufacturing Searcy, AR Manufacturing Stone Mountain, GA Distribution Hub (1) York, PA Manufacturing Industrial Technologies: Bocholt, Germany Manufacturing / Division Offices Cincinnati, OH Manufacturing / Distribution Fribourg, Switzerland Manufacturing (1) Gothenburg, Sweden Manufacturing / Distribution (1) Holoubkov, Czech Republic Manufacturing Lima, Costa Rica Manufacturing (1) Mönchengladbach, Germany Manufacturing (1) Pewaukee, WI Manufacturing (1) Pittsburgh, PA Division Offices San Antonio, TX Manufacturing Wilsonville, OR Manufacturing Vreden, Germany Manufacturing (2) SGK Brand Solutions: Battle Creek, MI Production Facility (1) Chennai, India Production Facility (1) Dachnow, Poland Manufacturing (1) East Butler, PA Production Facility (1) East Java, Indonesia Production Facility (1) Goslar, Germany Production Facility (1) Izmir, Turkey Manufacturing Jülich, Germany Production Facility (1) Manchester, England Production Facility (1) Minneapolis, MN Production Facility Mississauga, Canada Production Facility (1) Penang, Malaysia Production Facility Tigard, OR Production Facility (1) Corporate and Administrative Offices: Pittsburgh, PA General Offices (1) These properties are leased by the Company under operating lease arrangements.
Biggest changeSignificant principal properties of the Company and its majority-owned subsidiaries as of October 31, 2024 were as follows (properties, which are unencumbered, are owned by the Company except as noted): Location Description of Property Memorialization: Apopka, FL Manufacturing / Division Offices Aurora, IN Manufacturing Colorno, Italy Manufacturing Dallas, TX Distribution Hub (1) Dandenong, Australia Manufacturing (1) Elberton, GA Manufacturing Fontana, CA Distribution Hub (1) Harrisburg, PA Distribution Hub (1) Indianapolis, IN Distribution Hub (1) Monterrey, Mexico Manufacturing (1) Pittsburgh, PA Manufacturing / Division Offices Richmond, IN Manufacturing Searcy, AR Manufacturing Stone Mountain, GA Distribution Hub (1) York, PA Manufacturing Industrial Technologies: Bocholt, Germany Manufacturing / Division Offices Cincinnati, OH Manufacturing / Distribution Fribourg, Switzerland Manufacturing (1) Gothenburg, Sweden Manufacturing / Distribution (1) Holoubkov, Czech Republic Manufacturing Lima, Costa Rica Manufacturing (1) Mönchengladbach, Germany Manufacturing (1) Pewaukee, WI Manufacturing (1) Pittsburgh, PA Division Offices San Antonio, TX Manufacturing Wilsonville, OR Manufacturing Vreden, Germany Manufacturing (2) SGK Brand Solutions: Battle Creek, MI Production Facility (1) Chennai, India Production Facility (1) Dachnow, Poland Manufacturing (1) East Butler, PA Production Facility (1) East Java, Indonesia Production Facility (1) Goslar, Germany Production Facility (1) Izmir, Turkey Manufacturing Jülich, Germany Production Facility (1) Manchester, England Production Facility (1) Minneapolis, MN Production Facility Mississauga, Canada Production Facility (1) Penang, Malaysia Production Facility Tigard, OR Production Facility (1) Corporate and Administrative Offices: Pittsburgh, PA General Offices (1) These properties are leased by the Company under operating lease arrangements.
(2) The Vreden, Germany location represents a shared facility for both the Industrial Technologies and SGK Brand Solutions segments. 17
(2) The Vreden, Germany location represents a shared facility for both the Industrial Technologies and SGK Brand Solutions segments. 19

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+5 added−0 removed0 unchanged
Biggest changeITEM 3. LEGAL PROCEEDINGS. Matthews is subject to various legal proceedings and claims arising in the ordinary course of business. Management does not expect that the results of any of these legal proceedings will have a material adverse effect on Matthews' financial condition, results of operations or cash flows.
Biggest changeITEM 3. LEGAL PROCEEDINGS. The Company is subject to various legal proceedings and claims arising in the ordinary course of business. Management does not expect that the results of any of these ordinary course legal proceedings, as presently positioned, will have a material adverse effect on Matthews' financial condition, results of operations or cash flows.
Added
In addition to these ordinary course legal proceedings, the Company is involved in the following legal proceeding.
Added
On October 7, 2024, the United States District Court for the Northern District of California granted the Company’s motion to compel arbitration in response to a complaint filed by Tesla on June 14, 2024 against the Company in the Northern District of California, Civil Action No. 5:24-cv-03615 (N.D.
Added
Cal.), which alleged trade secret misappropriation under the DTSA and the CUTSA, breach of contract and unfair business practices. As a result of the Court’s favorable ruling, the matter filed by Tesla has been effectively stayed pending arbitration. The Company maintains the claims vaguely stated in the complaint are without merit and intends to vigorously defend itself against the allegations.
Added
The Company currently does not expect this matter will have a material adverse effect on Matthews' financial condition, results of operations or cash flows. Sales relating to dry battery electrode solutions were approximately 6% of the Company's sales for fiscal 2024.
Added
For a discussion of the risks to the Company associated with this matter, see Item 1A - "Risk Factors - Intellectual property infringement assertions by third parties, including those of Tesla, could result in significant costs and adversely affect the Company's business, financial condition, operating results and reputation."

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

8 edited+0 added−1 removed1 unchanged
Biggest changePrior thereto, she served as Vice President, Human Resources APAC, Middle East and Africa since May 2020 and prior thereto she served as Regional Director of Human Resources APAC since January 2013. Gary R. Kohl was appointed President, SGK Brand Solutions effective May 2017.
Biggest changeGackenbach was appointed Executive Vice President (Group President, Memorialization) effective October 31, 2011. Reena Gurtner was appointed Senior Vice President, Human Resources effective July 2021. Prior thereto, she served as Vice President, Human Resources APAC, Middle East and Africa since May 2020 and prior thereto she served as Regional Director of Human Resources APAC since January 2013. Gary R.
Nicola was appointed Chief Financial Officer and Secretary effective December 2003. Brian D. Walters was appointed Executive Vice President and General Counsel effective February 2023. Prior thereto, he served as Senior Vice President and General Counsel since February 2018. 19 PART II
Nicola was appointed Chief Financial Officer and Secretary effective December 2003. Brian D. Walters was appointed Executive Vice President and General Counsel effective February 2023. Prior thereto, he served as Senior Vice President and General Counsel since February 2018. 21 PART II
Awenowicz was appointed Senior Vice President, Global Compliance, Operations and North America Human Resources effective July 2021. Prior thereto, he served as Vice President of Americas Human Resources since May 2020 and prior thereto he served as Global Head of Human Resources Operations since February 2015, when he joined the Company. Gregory S.
Awenowicz was appointed Senior Vice President, Human Resources effective July 2021. Prior thereto, he served as Vice President of Americas Human Resources since May 2020 and prior thereto he served as Global Head of Human Resources Operations since February 2015, when he joined the Company. Gregory S.
Kohl 60 President, SGK Brand Solutions Lee Lane 55 Group President, Matthews Industrial Automation and Matthews Environmental Solutions Steven F. Nicola 63 Chief Financial Officer and Secretary Brian D. Walters 54 Executive Vice President and General Counsel Joseph C. Bartolacci was appointed President and Chief Executive Officer effective October 2006. Ronald C.
Kohl 61 Executive Vice President (Group President, SGK Brand Solutions) Lee Lane 56 Executive Vice President (Group President, Matthews Automation Solutions and Matthews Environmental Solutions) Steven F. Nicola 64 Chief Financial Officer and Secretary Brian D. Walters 55 Executive Vice President and General Counsel Joseph C. Bartolacci was appointed President and Chief Executive Officer effective October 2006. Ronald C.
Babe was appointed Chief Technology Officer and Group President, Industrial Technologies effective October 2022. Prior thereto, he served as Chief Technology Officer since November 2015. Davor Brkovich was appointed Head of IT and Chief Information Officer effective November 2019.
Babe was appointed Chief Technology Officer and Group President, Industrial Technologies effective October 2022. Prior thereto, he served as Chief Technology Officer since November 2015. Davor Brkovich was appointed Chief Information Officer effective November 2019. Prior thereto, he had been interim Head of IT and Chief Information Officer since February 2019. Steven D.
ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 18 OFFICERS AND EXECUTIVE MANAGEMENT OF THE REGISTRANT The following information is furnished with respect to officers and executive management as of October 31, 2023: Name Age Positions with Registrant Joseph C. Bartolacci 63 President and Chief Executive Officer Ronald C. Awenowicz 54 Senior Vice President, Global Compliance, Operations and N.A.
ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 20 OFFICERS AND EXECUTIVE MANAGEMENT OF THE REGISTRANT The following information is furnished with respect to officers and executive management as of October 31, 2024: Name Age Positions with Registrant Joseph C. Bartolacci 64 President and Chief Executive Officer Ronald C. Awenowicz 55 Senior Vice President, Human Resources Gregory S.
Lee Lane was appointed Group President for Matthews’ Product Identification and Warehouse Automation businesses as well as Matthews Environmental Solutions effective October 2022. Prior thereto, he served as Senior Vice President of Matthews Automation since June 2022.
Kohl was appointed Executive Vice President (Group President, SGK Brand Solutions) effective May 2017. Lee Lane was appointed Executive Vice President (Group President, Matthews Automation Solutions and Matthews Environmental Solutions) effective October 2022. Prior thereto, he served as Senior Vice President of Matthews Automation since June 2022.
Human Resources Gregory S. Babe 66 Chief Technology Officer and Group President, Industrial Technologies Davor Brkovich 55 Head of IT and Chief Information Officer Steven D. Gackenbach 60 Group President, Memorialization Reena Gurtner 49 Senior Vice President, Human Resources Gary R.
Babe 67 Chief Technology Officer and Group President, Industrial Technologies Davor Brkovich 56 Chief Information Officer Steven D. Gackenbach 61 Executive Vice President (Group President, Memorialization) Reena Gurtner 50 Senior Vice President, Human Resources Gary R.
Removed
Prior thereto, he had been interim Head of IT and Chief Information Officer since February 2019 and prior thereto he served as Director, Global IT Infrastructure since January 2017, when he joined the Company. Steven D. Gackenbach was appointed Group President, Memorialization effective October 31, 2011. Reena Gurtner was appointed Senior Vice President, Human Resources effective July 2021.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table shows the monthly fiscal 2023 stock repurchase activity: Period Total number of shares purchased Weighted-average price paid per share Total number of shares purchased as part of a publicly announced plan Maximum number of shares that may yet be purchased under the plan October 2022 — $ — — 1,294,842 November 2022 88,042 27.54 88,042 1,206,800 December 2022 983 27.54 983 1,205,817 January 2023 — — — 1,205,817 February 2023 549 37.09 549 1,205,268 March 2023 7,057 37.79 7,057 1,198,211 April 2023 — — — 1,198,211 May 2023 — — — 1,198,211 June 2023 2,068 38.86 2,068 1,196,143 July 2023 — — — 1,196,143 August 2023 1,130 32.79 1,130 1,195,013 September 2023 — — — 1,195,013 Total 99,829 $ 28.61 99,829 Holders: Based on records available to the Company, the number of record holders of the Company's common stock was 473 at October 31, 2023.
Biggest changeThe following table shows the monthly stock repurchase activity for the fourth quarter of fiscal 2024: Period Total number of shares purchased Weighted-average price paid per share Total number of shares purchased as part of a publicly announced plan Maximum number of shares that may yet be purchased under the plan July 2024 — $ — — 613,365 August 2024 350 28.45 350 613,015 September 2024 1,694 23.38 1,694 611,321 Total 2,044 $ 24.25 2,044 Holders: Based on records available to the Company, the number of record holders of the Company's Class A Common Stock was 454 at October 31, 2024.
The following graph compares the total return on the Company’s common stock with that of the Standard & Poor’s 500 Index and the Russell 2000 Value Index . The results are not necessarily indicative of future performance. * Total return assumes dividend reinvestment
The following graph compares the total return on the Company’s Class A Common Stock with that of the Standard & Poor’s 500 Index and the Russell 2000 Value Index. The results are not necessarily indicative of future performance. * Total return assumes dividend reinvestment
Securities Authorized for Issuance Under Equity Compensation Plans: See Equity Compensation Plans in Item 12 "Security Ownership of Certain Beneficial Owners and Management." 20 ITEM 5.
Securities Authorized for Issuance Under Equity Compensation Plans: See Equity Compensation Plans in Item 12 "Security Ownership of Certain Beneficial Owners and Management." 22 ITEM 5.
The graph assumes that on October 1, 2018, $100 was invested in each of the Company’s common stock , Standard & Poor’s 500 Index and Russell 2000 Value Index. The graph measures total stockholder return, which takes into account both changes in stock price and dividends. It assumes that dividends paid are invested in like securities.
The graph assumes that on October 1, 2019, $100 was invested in each of the Company’s Class A Common Stock , Standard & Poor’s 500 Index and Russell 2000 Value Index. The graph measures total stockholder return, which takes into account both changes in stock price and dividends. It assumes that dividends paid are invested in like securities.
MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS, (continued) PERFORMANCE GRAPH COMPARISON OF FIVE-YEAR CUMULATIVE RETURN * AMONG MATTHEWS INTERNATIONAL CORPORATION, S&P 500 INDEX AND RUSSELL 2000 VALUE INDEX This graph compares the return on Matthews’ common stock with that of the Standard & Poor’s 500 Index and Russell 2000 Value Index for the period from October 1, 2018 through September 30, 2023.
MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS, (continued) PERFORMANCE GRAPH COMPARISON OF FIVE-YEAR CUMULATIVE RETURN * AMONG MATTHEWS INTERNATIONAL CORPORATION, S&P 500 INDEX AND RUSSELL 2000 VALUE INDEX This graph compares the return on Matthews’ Class A Common Stock with that of the Standard & Poor’s 500 Index and Russell 2000 Value Index for the period from October 1, 2019 through September 30, 2024.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. Market Information: The authorized common stock of the Company consists of 70,000,000 shares of Class A Common Stock, $1.00 par value. At September 30, 2023, 30,469,213 shares were outstanding. The Company's Class A Common Stock is traded on the Nasdaq Global Select Market under the symbol "MATW".
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. Market Information: The authorized common stock of the Company consists of 70,000,000 shares of Class A Common Stock, $1.00 par value. At September 30, 2024, 30,602,492 shares were outstanding. The Company's Class A Common Stock is traded on the Nasdaq Global Select Market under the symbol "MATW".
Under the current authorization, 1,195,013 shares remain available for repurchase as of September 30, 2023. All purchases of the Company's common stock during fiscal 2023 were part of this repurchase program.
Under the current authorization, 611,321 shares remain available for repurchase as of September 30, 2024. All purchases of the Company's Class A Common Stock during fiscal 2024 were part of this repurchase program.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeAdjusted EBITDA for the SGK Brand Solutions segment for fiscal 2023 was $57.1 million, compared to $60.1 million for fiscal 2022. The decrease in segment adjusted EBITDA primarily reflected the impact of lower sales and higher material, labor and T&E costs, partially offset by benefits from cost reduction initiatives.
Biggest changeThe decrease in segment adjusted EBITDA primarily reflected the impact of lower sales, higher labor costs, lower margins on engineered products, and the impact of a fiscal 2023 divestiture. These decreases were partially offset by improved margins on warehouse automation solutions and product identification sales, benefits from cost-reduction initiatives, lower T&E costs, and lower performance-based compensation compared to fiscal 2023.
The Company uses non-GAAP financial measures to assist in comparing its performance on a consistent basis for purposes of business decision-making by removing the impact of certain items that management believes do not directly reflect the Company’s core operations including acquisition and divestiture costs, ERP integration costs, strategic initiative and other charges (which includes non-recurring charges related to operational initiatives and exit activities), stock-based compensation and the non-service portion of pension and postretirement expense.
The Company uses non-GAAP financial measures to assist in comparing its performance on a consistent basis for purposes of business decision-making by removing the impact of certain items that management believes do not directly reflect the Company’s core operations including acquisition and divestiture costs, ERP integration costs, strategic initiative and other charges (which includes non-recurring charges related to certain commercial and operational initiatives and exit activities), stock-based compensation and the non-service portion of pension and postretirement expense.
Management does not allocate non-operating items such as investment income, other income (deductions), net and noncontrolling interest to the segments. 22 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued) The following table sets forth sales and adjusted EBITDA for the Company's Memorialization, Industrial Technologies and SGK Brand Solutions segments for each of the last three fiscal years.
Management does not allocate non-operating items such as investment income, other income (deductions), net and noncontrolling interest to the segments. 24 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued) The following table sets forth sales and adjusted EBITDA for the Company's Memorialization, Industrial Technologies and SGK Brand Solutions segments for each of the last three fiscal years.
ITEM 6. [Reserved]. 21 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion should be read in conjunction with the consolidated financial statements of Matthews and related notes thereto. In addition, see "Cautionary Statement Regarding Forward-Looking Information" included in Part I of this Annual Report on Form 10-K.
ITEM 6. [Reserved]. 23 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion should be read in conjunction with the consolidated financial statements of Matthews and related notes thereto. In addition, see "Cautionary Statement Regarding Forward-Looking Information" included in Part I of this Annual Report on Form 10-K.
The Industrial Technologies segment includes the design, manufacturing, service and distribution of high-tech custom energy storage solutions; product identification and warehouse automation technologies and solutions, including order fulfillment systems for identifying, tracking, picking and conveying consumer and industrial products; and coating and converting lines for the packaging, pharma, foil, décor and tissue industries.
The Industrial Technologies segment includes the design, manufacturing, service and sales of high-tech custom energy storage solutions; product identification and warehouse automation technologies and solutions, including order fulfillment systems for identifying, tracking, picking and conveying consumer and industrial products; and coating and converting lines for the packaging, pharma, foil, décor and tissue industries.
Other income (deductions), net included currency losses associated with highly inflationary accounting for the Company's subsidiaries in Turkey totaling $1.4 million and $1.5 million in fiscal years 2023 and 2022, respectively (see Note 2, "Summary of Significant Accounting Policies" in Item 8 - "Financial Statements and Supplementary Data" for further details).
Other income (deductions), net included currency losses associated with highly inflationary accounting for the Company's subsidiaries in Turkey totaling $1.0 million and $1.4 million in fiscal years 2024 and 2023, respectively (see Note 2, "Summary of Significant Accounting Policies" in Item 8 - "Financial Statements and Supplementary Data" for further details).
Management's Discussion and Analysis of Financial Condition and Results of Operation" of the Company's annual report on Form 10-K for the fiscal year ended September 30, 2022 filed with the SEC on November 18, 2022. NON-GAAP FINANCIAL MEASURES: Included in this report are measures of financial performance that are not defined by GAAP.
Management's Discussion and Analysis of Financial Condition and Results of Operation" of the Company's annual report on Form 10-K for the fiscal year ended September 30, 2023 filed with the SEC on November 17, 2023. NON-GAAP FINANCIAL MEASURES: Included in this report are measures of financial performance that are not defined by GAAP.
The Company's definition of adjusted EBITDA may not be comparable to similarly titled measures used by other companies. 25
The Company's definition of adjusted EBITDA may not be comparable to similarly titled measures used by other companies. 27
Refer to Note 20, "Segment Information" in Item 8 - "Financial Statements and Supplemental Data" for the Company's financial information by segment.
Refer to Note 21, "Segment Information" in Item 8 - "Financial Statements and Supplemental Data" for the Company's financial information by segment.
The Company's consolidated income taxes for the year ended September 30, 2023 were an expense of $1.8 million, compared to a benefit of $4.4 million for fiscal 2022.
The Company's consolidated income taxes for the year ended September 30, 2024 were a benefit of $10.0 million, compared to an expense of $1.8 million for fiscal 2023.
Gross profit for the year ended September 30, 2023 was $577.7 million, compared to $522.3 million for fiscal 2022. Consolidated gross profit as a percent of sales was 30.7% and 29.6% in fiscal 2023 and fiscal 2022, respectively.
Gross profit for the year ended September 30, 2024 was $529.7 million, compared to $577.7 million for fiscal 2023. Consolidated gross profit as a percent of sales was 29.5% and 30.7% in fiscal 2024 and fiscal 2023, respectively.
In addition, the CODM manages and evaluates the operating performance of the segments, as described above, on a pre-corporate cost allocation basis. Accordingly, for segment reporting purposes, the Company does not allocate corporate costs to its reportable segments.
For these reasons, the Company believes that adjusted EBITDA represents the most relevant measure of segment profit and loss. In addition, the CODM manages and evaluates the operating performance of the segments, as described above, on a pre-corporate cost allocation basis. Accordingly, for segment reporting purposes, the Company does not allocate corporate costs to its reportable segments.
Years Ended September 30, 2023 2022 2021 (Dollar amounts in thousands) Sales to external customers: Memorialization $ 842,997 $ 840,124 $ 769,016 Industrial Technologies 505,751 335,523 284,495 SGK Brand Solutions 532,148 586,756 617,519 Consolidated Sales $ 1,880,896 $ 1,762,403 $ 1,671,030 Adjusted EBITDA: Memorialization $ 163,986 $ 151,849 $ 165,653 Industrial Technologies 66,278 56,762 34,889 SGK Brand Solutions 57,128 60,120 91,435 Corporate and Non-Operating (61,583) (58,323) (64,227) Total Adjusted EBITDA (1) $ 225,809 $ 210,408 $ 227,750 (1) Total Adjusted EBITDA is a non-GAAP financial measure.
Years Ended September 30, 2024 2023 2022 (Dollar amounts in thousands) Sales to external customers: Memorialization $ 829,731 $ 842,997 $ 840,124 Industrial Technologies 433,156 505,751 335,523 SGK Brand Solutions 532,850 532,148 586,756 Consolidated Sales $ 1,795,737 $ 1,880,896 $ 1,762,403 Adjusted EBITDA: Memorialization $ 162,586 $ 163,986 $ 151,849 Industrial Technologies 39,716 66,278 56,762 SGK Brand Solutions 61,620 57,128 60,120 Corporate and Non-Operating (58,765) (61,583) (58,323) Total Adjusted EBITDA (1) $ 205,157 $ 225,809 $ 210,408 (1) Total Adjusted EBITDA is a non-GAAP financial measure.
Fiscal 2023 non-service pension expense included a $1.3 million non-cash charge resulting from the settlement of the Company's supplemental retirement plan ("SERP") and defined benefit portion of the officers retirement restoration plan ("ORRP") obligations.
Other income (deductions), net includes the non-service components of pension and postretirement expense, which totaled $439,000 and $1.6 million in fiscal years 2024 and 2023, respectively. Fiscal 2023 non-service pension expense included a $1.3 million non-cash charge resulting from the settlement of the Company's supplemental retirement plan ("SERP") and defined benefit portion of the officers retirement restoration plan ("ORRP") obligations.
Adjusted EBITDA is defined by the Company as earnings before interest, income taxes, depreciation, amortization and certain non-cash and/or non-recurring items that do not contribute directly to management’s evaluation of its operating results. These items include stock-based compensation, the non-service portion of pension and postretirement expense, acquisition and divestiture costs, ERP integration costs, and strategic initiatives and other charges.
Adjusted EBITDA is defined by the Company as earnings before interest, income taxes, depreciation, amortization and certain non-cash and/or non-recurring items that do not contribute directly to management’s evaluation of its operating results.
In the fiscal 2022 fourth quarter, the Company recorded a goodwill write-down of $82.5 million related to the SGK Brand Solutions reporting unit (formerly the Graphics Imaging reporting unit). Refer to Note 22, "Goodwill and Other Intangible Assets" in Item 8 - "Financial Statements and Supplementary Data" for further details.
In the fiscal 2024 fourth quarter, the Company recorded a goodwill write-down of $16.7 million related to the Surfaces and Engineering reporting unit within the Industrial Technologies segment. Refer to Note 23, "Goodwill and Other Intangible Assets" in Item 8 - "Financial Statements and Supplementary Data" for further details.
The increase in gross profit primarily reflected the impact of higher sales (including benefits from recent acquisitions), lower transportation costs, and benefits from the realization of productivity improvements and other cost-reduction initiatives. These increases in gross profit were partially offset by the impact of higher material and labor costs, and lower margins on purpose-built engineered products.
The decrease in gross profit reflected the impact of lower sales, lower margins on engineered products and cremation equipment, and higher material and labor costs. These decreases were partially offset by improved margins on warehouse automation solutions, product identification sales, and cylinder (packaging) products, and benefits from the realization of productivity improvements and other cost-reduction initiatives.
Other income (deductions), net also includes investment income, banking-related fees and the impact of currency gains and losses on certain intercompany debt and foreign denominated cash balances.
Refer to Note 16, "Pension and Other Postretirement Plans" in Item 8 - "Financial Statements and Supplementary Data" for further details. Other income (deductions), net also includes investment income, banking-related fees and the impact of currency gains and losses on certain intercompany debt and foreign denominated cash balances.
See the "Non-GAAP Financial Measures" section below. Comparison of Fiscal 2023 and Fiscal 2022: Sales for the year ended September 30, 2023 were $1.88 billion, compared to $1.76 billion for the year ended September 30, 2022, representing an increase of $118.5 million.
See the "Non-GAAP Financial Measures" section below. Comparison of Fiscal 2024 and Fiscal 2023: Sales for the year ended September 30, 2024 were $1.80 billion, compared to $1.88 billion for the year ended September 30, 2023. The decrease in fiscal 2024 sales primarily reflected lower sales in the Industrial Technologies and Memorialization segments.
These increases were partially offset by lower unit sales of caskets and bronze memorial products, reflecting a decrease in coronavirus disease 2019 ("COVID-19") related deaths in fiscal 2023, and lower sales of cremation and incineration products in Europe. Changes in foreign currency exchange rates had an unfavorable impact of $1.8 million on the segment's sales compared to the prior year.
These increases were partially offset by lower retail-based sales, lower brand sales in Europe, and the impact of unfavorable changes in foreign exchange rates. Changes in foreign currency exchange rates had an unfavorable impact of $3.1 million on the segment's sales compared to the prior year.
The net losses attributable to noncontrolling interests primarily reflected losses in less than wholly-owned businesses. Comparison of Fiscal 2022 and Fiscal 2021: For a comparison of the Company's results of operations for the fiscal years ended September 30, 2022 and September 30, 2021, see "Part II, Item 7.
Comparison of Fiscal 2023 and Fiscal 2022: For a comparison of the Company's results of operations for the fiscal years ended September 30, 2023 and September 30, 2022, see "Part II, Item 7.
These increases were partially offset by the impact of higher material, labor and T&E costs, and increased performance-based compensation compared to fiscal 2022. Adjusted EBITDA for the Industrial Technologies segment for fiscal 2023 was $66.3 million, compared to $56.8 million in fiscal 2022.
These decreases were partially offset by the impact of improved price realization, benefits from productivity initiatives, lower distribution costs, and lower performance-based compensation compared to fiscal 2023. Adjusted EBITDA for the Industrial Technologies segment for fiscal 2024 was $39.7 million, compared to $66.3 million in fiscal 2023.
Other income (deductions), net for the year ended September 30, 2023 represented a decrease in pre-tax income of $2.6 million, compared to a decrease in pre-tax income of $32.6 million in fiscal 2022. Other income (deductions), net includes the non-service components of pension and postretirement expense, which totaled $1.6 million and $31.8 million in fiscal years 2023 and 2022, respectively.
The increase in interest expense reflected higher average interest rates and an increase in average borrowing levels in the current fiscal year. Other income (deductions), net for the year ended September 30, 2024 represented a decrease in pre-tax income of $6.8 million, compared to a decrease in pre-tax income of $2.6 million in fiscal 2023.
These increases in selling and administrative expenses were partially offset by benefits from ongoing cost-reduction initiatives. Selling and administrative expenses also included acquisition integration and related systems-integration costs, and other charges primarily in connection with cost-reduction initiatives totaling $12.5 million in fiscal 2023, compared to $27.1 million in fiscal 2022.
Selling and administrative expenses also included acquisition integration and related systems-integration costs, and other charges primarily in connection with certain commercial, operational and cost-reduction initiatives totaling $24.5 million in fiscal 2024, compared to $12.5 million in fiscal 2023. Intangible amortization for the year ended September 30, 2024 was $37.0 million, compared to $42.1 million for fiscal 2023.
Gross profit also included acquisition integration costs and other charges primarily in connection with cost-reduction initiatives totaling $12.2 million and $12.6 million in fiscal 2023 and 2022, respectively. Fiscal 2022 gross 23 ITEM 7.
Gross profit also included acquisition integration costs and other charges primarily in connection with cost-reduction initiatives totaling $39.2 million and $12.2 million in fiscal 2024 and 2023, respectively. 25 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued) Selling and administrative expenses for the year ended September 30, 2024 were $488.3 million, compared to $447.5 million for fiscal 2023.
Additionally, the fiscal 2023 tax rate benefited from research and development and foreign tax credits and the utilization of foreign tax net operating losses with a valuation allowance. The fiscal 2022 consolidated loss reflected a goodwill write-down recorded in the fourth quarter of fiscal 2022 that was primarily non-deductible.
Additionally, the fiscal 2024 tax rate benefited from research and development and foreign tax credits. The fiscal 2023 effective tax rate benefited from research and development and foreign tax credits, and changes in realizability of foreign deferred tax assets due to the utilization of foreign tax net operating losses with a valuation allowance.
The fiscal 2022 effective tax rate also benefited from research and development and foreign tax credits. The fiscal 2022 effective tax rate was negatively impacted by foreign net operating losses requiring a full valuation allowance. 24 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued) Net losses attributable to noncontrolling interests were $155,000 in fiscal 2023, compared to $54,000 in fiscal 2022.
The fiscal 2023 effective tax rate was negatively impacted by share-based compensation. 26 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued) Net losses attributable to noncontrolling interests were $155,000 in fiscal 2023, reflecting losses in less than wholly-owned businesses.
Adjusted EBITDA for fiscal 2023 was $225.8 million, compared to $210.4 million for fiscal 2022. Memorialization segment adjusted EBITDA for fiscal 2023 was $164.0 million, compared to $151.8 million for fiscal 2022. The increase in segment adjusted EBITDA reflected the impact of higher sales, lower transportation costs, benefits from the acquisition of Eagle Granite Company, and benefits from productivity initiatives.
Adjusted EBITDA for fiscal 2024 was $205.2 million, compared to $225.8 million for fiscal 2023. Memorialization segment adjusted EBITDA for fiscal 2024 was $162.6 million, compared to $164.0 million for fiscal 2023. The decrease in segment adjusted EBITDA reflected the impact of lower unit sales, higher material and labor costs, and lower margins on cremation equipment.
Consolidated selling and administrative expenses, as a percent of sales, were 23.8% for fiscal 2023, compared to 24.2% in fiscal 2022.
Consolidated selling and administrative expenses, as a percent of sales, were 27.2% for fiscal 2024, compared to 23.8% in fiscal 2023. Selling and administrative expenses in fiscal 2024 reflected higher compensation costs and additional expenses from recently completed acquisitions, partially offset by benefits from ongoing cost-reduction initiatives and lower travel and entertainment ("T&E") costs.
The difference between the Company's consolidated income taxes for fiscal 2023 compared to fiscal 2022 partially resulted from fiscal 2023 having consolidated income before income taxes compared to fiscal 2022 having a consolidated loss before income taxes. The fiscal 2023 tax rate was negatively impacted by share-based compensation.
The difference between the Company's consolidated income taxes for fiscal 2024 compared to fiscal 2023 partially resulted from the Company's fiscal 2024 pre-tax consolidated loss position compared to pre-tax consolidated income for fiscal 2023. The fiscal 2024 tax rate included charges related to changes in the realizability of foreign deferred tax assets.
The increase in sales also reflected higher sales of purpose-built engineered products (primarily energy storage solutions for the electric vehicle market) and higher product identification sales. These increases were partially offset by lower sales of warehouse automation solutions. Changes in foreign currency exchange rates had an unfavorable impact of $5.7 million on the segment's sales compared to the prior year.
The decrease in sales reflected lower sales of purpose-built engineered products (primarily energy storage solutions for the electric vehicle market) and reduced sales of warehouse automation solutions.
In the SGK Brand Solutions segment, sales for fiscal 2023 were $532.1 million, compared to $586.8 million in fiscal 2022. Changes in foreign currency exchange rates had an unfavorable impact of $16.1 million on the segment's sales compared to the prior year.
Fiscal 2024 sales for the Industrial Technologies segment were impacted by slower market conditions for the warehouse automation business, and customer delays impacting the timing of projects within the energy storage business. Changes in foreign currency exchange rates had a favorable impact of $4.1 million on the segment's sales compared to the prior year.
This presentation is consistent with how the Company's chief operating decision maker (the “CODM”) evaluates the results of operations and makes strategic decisions about the business. For these reasons, the Company believes that adjusted EBITDA represents the most relevant measure of segment profit and loss.
These items include stock-based compensation, the non-service portion of pension and postretirement expense, acquisition and divestiture costs, enterprise resource planning ("ERP") integration costs, and strategic initiatives and other charges. This presentation is consistent with how the Company's chief operating decision maker (the “CODM”) evaluates the results of operations and makes strategic decisions about the business.
The increase in segment adjusted EBITDA primarily reflected the impact of higher sales, partially offset by the impact of higher labor and T&E costs, increased performance-based compensation compared to fiscal 2022, and unfavorable contributions from recent acquisitions. Changes in foreign currency exchange rates had an unfavorable impact of $1.3 million on the segment's adjusted EBITDA compared to the prior year.
The increase in segment adjusted EBITDA primarily reflected the impact of improved price realization, benefits from cost-reduction initiatives and improved margins on cylinder (packaging) products, partially offset by the impact of higher labor costs and higher performance-based compensation compared to fiscal 2023. Interest expense for fiscal 2024 was $50.5 million, compared to $44.6 million in fiscal 2023.
MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued) profit included $9.7 million of asset write-downs related to the war between Russia and Ukraine (see Note 23, "Asset Write-downs" in Item 8 - "Financial Statements and Supplementary Data" for further details). Selling and administrative expenses for the year ended September 30, 2023 were $447.5 million, compared to $426.7 million for fiscal 2022.
Fiscal 2024 selling and administrative expenses included a non-cash impairment charge of $13.7 million for the write-down of certain net assets held-for-sale within the Memorialization segment. Refer to Note 24, "Asset Write-downs" in Item 8 - "Financial Statements and Supplementary Data" for further details.
Fiscal 2022 non-service pension expense included a $30.9 million non-cash charge resulting from the full settlement of the Company's principal defined benefit retirement plan ("DB Plan") obligations. Refer to Note 15, "Pension and Other Postretirement Plans" in Item 8 - "Financial Statements and Supplementary Data" for further details.
Fiscal 2024 other income (deductions), net included a non-cash impairment charge of $3.1 million for the write-down of a cost-method investment (see Note 8, "Investments" in Item 8 - "Financial Statements and Supplementary Data" for further details).
Memorialization segment sales for fiscal 2023 were $843.0 million, compared to $840.1 million for fiscal 2022. The sales increase reflected improved price realization, higher sales of mausoleums and cremation equipment in the U.S., and benefits from the acquisition of Eagle Granite Company (see Acquisitions and Divestitures below).
These declines were partially offset by improved price realization, benefits from recent acquisitions (see Acquisitions and Divestitures below), and higher mausoleum sales. Industrial Technologies segment sales for fiscal 2024 were $433.2 million, compared to $505.8 million for fiscal 2023.
Removed
The increase in fiscal 2023 sales reflected higher sales in the Industrial Technologies and Memorialization segments, partially offset by lower sales in the SGK Brand Solutions segment. On a consolidated basis, changes in foreign currency exchange rates were estimated to have an unfavorable impact of $23.6 million on fiscal 2023 sales compared to the prior year.
Added
Memorialization segment sales for fiscal 2024 were $829.7 million, compared to $843.0 million for fiscal 2023. The sales decrease reflected lower unit sales of caskets, cemetery memorial products, and cremation equipment, predominantly resulting from a return to more normalized death rates following the COVID-19 pandemic.
Removed
Industrial Technologies segment sales for fiscal 2023 were $505.8 million, compared to $335.5 million for fiscal 2022. The sales increase primarily reflected the impact of the fiscal 2022 acquisitions of OLBRICH GmbH (“OLBRICH”) and R+S Automotive GmbH (“R+S Automotive”) (see Acquisitions and Divestitures below).
Added
The decrease also reflected lower sales of the recently acquired automotive solutions business (R+S Automotive GmbH), as the Company discontinues these product offerings, and the sales impact of a fiscal 2023 divestiture (see Acquisitions and Divestitures below).
Removed
The decrease in sales also reflected lower brand sales in the U.S. and Europe (including lower retail-based sales) and a decline in sales of cylinder (packaging) products in Europe. These decreases were partially offset by higher brand sales in the Asia-Pacific market and improved price realization.
Added
In the SGK Brand Solutions segment, sales for fiscal 2024 were $532.9 million, compared to $532.1 million for fiscal 2023. The increase in sales reflected higher sales of cylinder (packaging) products in Europe, higher brand sales in the Asia-Pacific region, increased private-label brand sales, and improved price realization to mitigate inflationary cost increases.
Removed
Fiscal 2023 selling and administrative expenses reflected the impact of higher salaries and wage rates, higher travel and entertainment ("T&E") costs, increased performance-based compensation compared to fiscal 2022, additional expenses from recently completed acquisitions, and fees associated with a receivables purchase agreement and factoring arrangement (see Liquidity and Capital Resources below).
Added
Fiscal 2024 selling and administrative expenses included $12.4 million of legal costs related to an ongoing dispute in the Company's energy storage business (see Legal Matter below).
Removed
Intangible amortization for the year ended September 30, 2023 was $42.1 million, compared to $57.1 million for fiscal 2022. Fiscal 2022 intangible amortization included $9.5 million of amortization related to certain trade names that have been discontinued.
Added
Adjusted EBITDA for the SGK Brand Solutions segment for fiscal 2024 was $61.6 million, compared to $57.1 million for fiscal 2023.
Removed
Changes in foreign currency exchange rates had an unfavorable impact of $2.0 million on the segment's adjusted EBITDA compared to the prior year. Interest expense for fiscal 2023 was $44.6 million, compared to $27.7 million in fiscal 2022. The increase in interest expense primarily reflected higher average interest rates in the current fiscal year.
Added
These changes included both current year foreign net operating losses requiring a full valuation allowance as well as other changes in realizability of certain foreign net operating losses from prior years. The fiscal 2024 consolidated loss before income taxes also reflected a goodwill write-down and write-down of certain net assets held-for-sale that were non-deductible for tax purposes.
Added
Legal Matter Refer to Note 19, "Commitments and Contingent Liabilities" in Item 8 - "Financial Statements and Supplementary Data," for details related to an ongoing dispute with Tesla.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changePlease note that GAAP pension and postretirement expense or the adjustment above are not necessarily indicative of the current or future cash flow requirements related to these employee benefit plans. * Depreciation and amortization was $23.7 million, $23.2 million, and $23.0 million, for the Memorialization segment, $23.2 million, $11.4 million, and $11.4 million for the Industrial Technologies segment, $44.8 million, $64.2 million, and $93.7 million for the SGK Brand Solutions segment, and $4.8 million, $5.3 million, and $5.4 million for Corporate and Non-Operating, for the fiscal years ended September 30, 2023, 2022, and 2021, respectively. ** Acquisition and divestiture costs, ERP integration costs, and strategic initiatives and other charges were $1.0 million, $3.5 million, and $1.9 million for the Memorialization segment, $4.1 million, $5.6 million, and $4.0 million for the Industrial Technologies segment, $10.9 million, $19.4 million, and $12.3 million for the SGK Brand Solutions segment, and $3.2 million, $7.5 million, and $11.3 million for Corporate and Non-Operating, for the fiscal years ended September 30, 2023, 2022, and 2021, respectively. *** Non-recurring/incremental COVID-19 costs were $1.3 million. and $3.6 million for the Memorialization segment, $6,000, and $38,000 for the Industrial Technologies segment, $1.2 million, and $1.5 million for the SGK Brand Solutions segment, $466,000, and $89,000 for Corporate and Non-Operating, for the fiscal years ended September 30, 2022, and 2021, respectively. 26 ITEM 7.
Biggest changePlease note that GAAP pension and postretirement expense or the adjustment above are not necessarily indicative of the current or future cash flow requirements related to these employee benefit plans. * Depreciation and amortization was $27.8 million, $23.7 million, and $23.2 million, for the Memorialization segment, $23.8 million, $23.2 million, and $11.4 million for the Industrial Technologies segment, $38.7 million, $44.8 million, and $64.2 million for the SGK Brand Solutions segment, and $4.6 million, $4.8 million, and $5.3 million for Corporate and Non-Operating, for the fiscal years ended September 30, 2024, 2023, and 2022, respectively. ** Acquisition and divestiture costs, ERP integration costs, and strategic initiatives and other charges were $3.5 million, $1.0 million, and $3.5 million for the Memorialization segment, $54.4 million, $4.1 million, and $5.6 million for the Industrial Technologies segment, $3.0 million, $10.9 million, and $19.4 million for the SGK Brand Solutions segment, and $10.3 million, $3.2 million, and $7.5 million for Corporate and Non-Operating, for the fiscal years ended September 30, 2024, 2023, and 2022, respectively. *** Non-recurring/incremental COVID-19 costs were $1.3 million for the Memorialization segment, $6,000 for the Industrial Technologies segment, $1.2 million for the SGK Brand Solutions segment, and $466,000 for Corporate and Non-Operating, for the fiscal year ended September 30, 2022. † Strategic initiatives and other charges includes charges for exit and disposal activities (including severance and other employee termination benefits) totaling $45.7 million, $13.2 million and $14.6 million in fiscal years 2024, 2023 and 2022, respectively.
Due to the global footprint of the Company’s businesses, particularly the Industrial Technologies and SGK Brand Solutions segments, currency fluctuations can also be a significant factor on Company’s U.S. dollar reported results. Recent labor cost increases, supply chain challenges, and other inflation-related impacts are expected to impact the Company's results for the near future.
Due to the global footprint of the Company’s businesses, particularly the Industrial Technologies and SGK Brand Solutions segments, currency fluctuations can also be a significant factor on the Company’s U.S. dollar reported results. Recent labor cost increases, supply chain challenges, and other inflation-related impacts are expected to impact the Company's results for the near future.
CRITICAL ACCOUNTING POLICIES: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
CRITICAL ACCOUNTING ESTIMATES AND POLICIES: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
The fair value for the reporting unit was determined using level 3 inputs (including estimates of revenue growth, EBITDA contribution and the discount rates) and a combination of the income approach using the estimated discounted cash flows and a market-based valuation methodology.
The fair value for the reporting unit was determined using level 3 inputs (including estimates of revenue growth, EBITDA contribution and the discount rates) and a combination of the income approach using the estimated discounted cash flows and a market-based valuation methodology.
The buy-back program is designed to increase shareholder value, enlarge the Company's holdings of its common stock, and add to earnings per share. Repurchased shares may be retained in treasury, utilized for acquisitions, or reissued to employees or other purchasers, subject to the restrictions set forth in the Company's Restated Articles of Incorporation.
The buy-back program is designed to increase shareholder value, enlarge the Company's holdings of its Class A Common Stock, and add to earnings per share. Repurchased shares may be retained in treasury, utilized for acquisitions, or reissued to employees or other purchasers, subject to the restrictions set forth in the Company's Restated Articles of Incorporation.
(9) Non-service pension and postretirement expense includes interest cost, expected return on plan assets, amortization of actuarial gains and losses, curtailment gains and losses, and settlement gains and losses. These benefit cost components are excluded from adjusted EBITDA since they are primarily influenced by external market conditions that impact investment returns and interest (discount) rates.
(8) Non-service pension and postretirement expense includes interest cost, expected return on plan assets, amortization of actuarial gains and losses, curtailment gains and losses, and settlement gains and losses. These benefit cost components are excluded from adjusted EBITDA since they are primarily influenced by external market conditions that impact investment returns and interest (discount) rates.
The Company performed its annual impairment review of goodwill and indefinite-lived intangible assets in the second quarter of fiscal 2023 (January 1, 2023) and determined that the estimated fair values for all goodwill reporting units exceeded their carrying values, therefore no impairment charges were necessary.
The Company performed its annual impairment review of goodwill and indefinite-lived intangible assets in the second quarter of fiscal 2024 (January 1, 2024) and determined that the estimated fair values for all goodwill reporting units exceeded their carrying values, therefore no impairment charges were necessary.
The Company's current ratio was 1.6 and 1.5 at September 30, 2023 and 2022, respectively. Long-Term Contractual Obligations: The following table summarizes the Company's contractual obligations at September 30, 2023, and the effect such obligations are expected to have on its liquidity and cash flows in future periods.
The Company's current ratio was 1.5 and 1.6 at September 30, 2024 and 2023, respectively. Long-Term Contractual Obligations: The following table summarizes the Company's contractual obligations at September 30, 2024, and the effect such obligations are expected to have on its liquidity and cash flows in future periods.
In fiscal 2022, in its assessment of the potential impacts of weakened economic conditions (particularly in Europe), increases in the cost of certain materials, labor, and other inflation-related pressures, and unfavorable changes in foreign exchange rates on the estimated future earnings and cash flows for the SGK Brand Solutions reporting unit, and in light of the limited excess fair value over carrying value for this reporting unit, management determined a triggering event occurred, resulting in a re-evaluation of goodwill for the reporting unit, as of September 1, 2022.
MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued) In fiscal 2022, in its assessment of the potential impacts of weakened economic conditions (particularly in Europe), increases in the cost of certain materials, labor, and other inflation-related pressures, and unfavorable changes in foreign exchange rates on the estimated future earnings and cash flows for the SGK Brand Solutions reporting unit, and in light of the limited excess fair value over carrying value for this reporting unit, management determined a triggering event occurred, resulting in a re-evaluation of goodwill for the reporting unit, as of September 1, 2022.
The results of this review indicated that the estimated fair value of the Company's SGK Brand Solutions reporting unit exceeded the carrying value (expressed as a percentage of carrying value) by approximately 4%.
The results of this review indicated that the estimated fair value of the Company's SGK Brand Solutions reporting unit exceeded the carrying value (expressed as a percentage of carrying value) by approximately 7%.
The fair value of the sold receivables approximated book value due to their credit quality and short-term nature, and as a result, no gain or loss on sale of receivables was recorded. As of September 30, 2023, and 2022, the amount sold to the Purchasers was $101.8 million and $96.6 million, respectively which was derecognized from the Consolidated Balance Sheets.
The fair value of the sold receivables approximated book value due to their credit quality and short-term nature, and as a result, no gain or loss on sale of receivables was recorded. As of September 30, 2024, and 2023, the amount sold to the Purchasers was $96.3 million and $101.8 million, respectively which was derecognized from the Consolidated Balance Sheets.
The Company, through certain of its European subsidiaries, has a credit facility with a European bank, which is guaranteed by Matthews. The maximum amount of borrowings available under this facility is €10.0 million ($10.6 million). This facility also provides €18.5 million ($19.6 million) for bank guarantees. This facility has no stated maturity date and is available until terminated.
The Company, through certain of its European subsidiaries, has a credit facility with a European bank, which is guaranteed by Matthews. The maximum amount of borrowings available under this facility is €10.0 million ($11.2 million). This facility also provides €18.5 million ($20.6 million) for bank guarantees. This facility has no stated maturity date and is available until terminated.
MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued) Long-Lived Assets, including Property, Plant and Equipment: Long-lived assets are recorded at their respective cost basis on the date of acquisition. Depreciation on property, plant and equipment is computed primarily on the straight-line method over the estimated useful lives of the assets. Intangible assets with finite useful lives are amortized over their estimated useful lives.
Long-Lived Assets, including Property, Plant and Equipment: Long-lived assets are recorded at their respective cost basis on the date of acquisition. Depreciation on property, plant and equipment is computed primarily on the straight-line method over the estimated useful lives of the assets. Intangible assets with finite useful lives are amortized over their estimated useful lives.
Management believes that the application of these policies on a consistent basis enables the Company to provide useful and reliable financial information about the Company's operating results and financial condition. The following accounting policies involve significant estimates, which were considered critical to the preparation of the Company's consolidated financial statements for the year ended September 30, 2023. 31 ITEM 7.
Management believes that the application of these policies on a consistent basis enables the Company to provide useful and reliable financial information about the Company's operating results and financial condition. The following accounting policies involve significant estimates, which were considered critical to the preparation of the Company's consolidated financial statements for the year ended September 30, 2024.
In the first quarter of fiscal 2023, the Company made lump sum payments totaling $24.2 million to fully settle the Company's non-qualified Supplemental Retirement Plan ("SERP") and defined benefit portion of the Company's Officers Retirement Restoration Plan ("ORRP") obligations.
MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued) In the first quarter of fiscal 2023, the Company made lump sum payments totaling $24.2 million to fully settle the Company's non-qualified Supplemental Retirement Plan ("SERP") and defined benefit portion of the Company's Officers Retirement Restoration Plan ("ORRP") obligations.
No such charges were recognized during the years presented, except as disclosed in Note 23, “Asset Write-Downs" in Item 8 - "Financial Statements and Supplementary Data." Goodwill and Indefinite-Lived Intangibles: Goodwill and intangible assets with indefinite useful lives are not amortized, but are tested annually for impairment, or when circumstances indicate that a possible impairment may exist.
No impairment charges for property, plant and equipment were recognized during the years presented, except as disclosed in Note 24, “Asset Write-Downs" in Item 8 - "Financial Statements and Supplementary Data." Goodwill and Indefinite-Lived Intangibles: Goodwill and intangible assets with indefinite useful lives are not amortized, but are tested annually for impairment, or when circumstances indicate that a possible impairment may exist.
The following table presents information related to interest rate swaps entered into by the Company and designated as cash flow hedges: September 30, 2023 September 30, 2022 (Dollar amounts in thousands) Notional amount $ 175,000 $ 125,000 Weighted-average maturity period (years) 4.1 3.1 Weighted-average received rate 5.32 % 3.14 % Weighted-average pay rate 3.83 % 1.04 % The Company enters into interest rate swaps in order to achieve a mix of fixed and variable rate debt that it deems appropriate.
The following table presents information related to interest rate swaps entered into by the Company and designated as cash flow hedges: September 30, 2024 September 30, 2023 (Dollar amounts in thousands) Notional amount $ 175,000 $ 175,000 Weighted-average maturity period (years) 3.2 4.1 Weighted-average received rate 4.85 % 5.32 % Weighted-average pay rate 3.83 % 3.83 % The Company enters into interest rate swaps in order to achieve a mix of fixed and variable rate debt that it deems appropriate.
A discussion of market risks affecting the Company can be found in Item 7A, "Quantitative and Qualitative Disclosures about Market Risk," of this Annual Report on Form 10-K. The Company's significant accounting policies are included in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
A discussion of market risks affecting the Company can be found in Item 7A, "Quantitative and Qualitative Disclosures about Market Risk," of this Annual Report on Form 10-K. 33 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued) The Company's significant accounting policies are included in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. Deferred 32 ITEM 7.
Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized.
MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued) LIQUIDITY AND CAPITAL RESOURCES : Net cash provided by operating activities was $79.5 million for the year ended September 30, 2023, compared to $126.9 million and $162.8 million for fiscal years 2022 and 2021, respectively.
MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued) LIQUIDITY AND CAPITAL RESOURCES : Net cash provided by operating activities was $79.3 million for the year ended September 30, 2024, compared to $79.5 million and $126.9 million for fiscal years 2023 and 2022, respectively.
Cash used in financing activities for the year ended September 30, 2022 was $37.2 million, and principally reflected proceeds, net of repayments, on long-term debt of $35.7 million, purchases of treasury stock of $41.7 million, payment of dividends to the Company's shareholders of $27.7 million ($0.88 per share), and $725,000 of holdback and contingent consideration payments related to acquisitions from prior years.
Cash used in financing activities for the year ended September 30, 2022 was $37.2 million, and principally reflected proceeds, net of repayments, on long-term debt of $35.7 million, purchases of treasury stock of $41.7 million, payment of dividends of $27.7 million, and $725,000 of holdback and contingent consideration payments related to acquisitions from prior years. 29 ITEM 7.
Cash used in financing activities for the year ended September 30, 2023 was $50.2 million, and principally reflected repayments, net of proceeds, on long-term debt of $18.2 million, purchases of treasury stock of $2.9 million, and payment of dividends to the Company's shareholders of $28.2 million ($0.92 per share).
Cash used in financing activities for the year ended September 30, 2023 was $50.2 million, and principally reflected repayments, net of proceeds, on long-term debt of $18.2 million, purchases of treasury stock of $2.9 million, and payment of dividends of $28.2 million.
MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued) income taxes have not been provided on undistributed earnings of foreign subsidiaries since they have either been previously taxed, or are exempt from tax, or such earnings are considered to be reinvested indefinitely in foreign operations.
Deferred income taxes have not been provided on undistributed earnings of foreign subsidiaries since they have either been previously taxed, or are exempt from tax, or such earnings are considered to be reinvested indefinitely in foreign operations.
The fair value of the interest rate swaps reflected a net unrealized gain of $4.0 million ($3.0 million after tax) and $10.7 million ($7.9 million after tax) at September 30, 2023 and 2022, respectively, that is included in shareholders' equity as part of accumulated other comprehensive income ("AOCI").
The fair value of the interest rate swaps reflected a net unrealized loss of $2.6 million ($1.9 million after tax) and a net unrealized gain of $4.0 million ($3.0 million after tax) at September 30, 2024 and 2023, respectively, that is included in shareholders' equity as part of accumulated other comprehensive income ("AOCI").
Capital expenditures were $50.6 million for the year ended September 30, 2023, compared to $61.3 million and $34.3 million for fiscal years 2022 and 2021, respectively.
Capital expenditures were $45.2 million for the year ended September 30, 2024, compared to $50.6 million and $61.3 million for fiscal years 2023 and 2022, respectively.
Borrowings under the revolving credit facility now bear interest at SOFR, plus a 0.10% per annum rate spread adjustment, plus a factor ranging from 0.75% to 2.00% (1.25% at September 30, 2023) based on the Company's secured leverage ratio.
Borrowings under the revolving credit facility bear interest at Secured Overnight Financing Rate ("SOFR"), plus a 0.10% per annum rate spread adjustment, plus a factor ranging from 1.00% to 2.00% (1.50% at September 30, 2024) based on the Company's leverage ratio.
Outstanding Euro denominated borrowings on the revolving credit facility at September 30, 2023 and 2022 were €55.0 million ($58.2 million) and €45.0 million ($44.1 million), respectively. The weighted-average interest rate on outstanding borrowings for the domestic credit facility (including the effects of interest rate swaps and Euro denominated borrowings) at September 30, 2023 and 2022 was 5.95% and 3.13%, respectively.
Outstanding Euro denominated borrowings on the revolving credit facility at September 30, 2024 and 2023 were €30.0 million ($33.5 million) and €55.0 million ($58.2 million), respectively. The weighted-average interest rate on outstanding borrowings for the domestic credit facility (including the effects of interest rate swaps and Euro denominated borrowings) at September 30, 2024 and 2023 was 4.59% and 5.95%, respectively.
MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued) The reconciliation of net income to adjusted EBITDA is as follows: Years Ended September 30, 2023 2022 2021 (Dollar amounts in thousands) Net income (loss) $ 39,136 $ (99,828) $ 2,858 Income tax provision (benefit) 1,774 (4,391) 6,375 Income (loss) before income taxes 40,910 (104,219) 9,233 Net loss attributable to noncontrolling interests 155 54 52 Interest expense, including Receivables Purchase Agreement ("RPA") and factoring financing fees (1) 48,690 28,771 28,684 Depreciation and amortization * 96,530 104,056 133,512 Acquisition and divestiture related items (2) ** 5,293 7,898 541 Strategic initiatives and other charges (3)** 13,923 28,060 28,998 Non-recurring / incremental COVID-19 costs (4)*** — 2,985 5,312 Highly inflationary accounting losses (primarily non-cash) (5) 1,360 1,473 — Defined benefit plan termination related items (6) — (429) — Asset write-downs, net (7) — 10,050 — Goodwill write-downs (8) — 82,454 — Stock-based compensation 17,308 17,432 15,581 Non-service pension and postretirement expense (9) 1,640 31,823 5,837 Total Adjusted EBITDA $ 225,809 $ 210,408 $ 227,750 (1) Includes fees for receivables sold under the RPA and factoring arrangements totaling $4.0 million and $1.0 million for the fiscal years ended September 30, 2023 and 2022, respectively.
MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued) The reconciliation of net income to adjusted EBITDA is as follows: Years Ended September 30, 2024 2023 2022 (Dollar amounts in thousands) Net (loss) income $ (59,660) $ 39,136 $ (99,828) Income tax (benefit) provision (9,997) 1,774 (4,391) (Loss) income before income taxes (69,657) 40,910 (104,219) Net loss attributable to noncontrolling interests — 155 54 Interest expense, including Receivables Purchase Agreement ("RPA") and factoring financing fees (1) 55,364 48,690 28,771 Depreciation and amortization * 94,770 96,530 104,056 Acquisition and divestiture related items (2) ** 5,576 5,293 7,898 Strategic initiatives and other charges (3)**† 65,586 13,923 28,060 Non-recurring / incremental COVID-19 costs (4)*** — — 2,985 Highly inflationary accounting losses (primarily non-cash) (5) 1,027 1,360 1,473 Defined benefit plan termination related items (6) — — (429) Goodwill and asset write-downs (7) 33,574 — 92,504 Stock-based compensation 18,478 17,308 17,432 Non-service pension and postretirement expense (8) 439 1,640 31,823 Total Adjusted EBITDA $ 205,157 $ 225,809 $ 210,408 (1) Includes fees for receivables sold under the RPA and factoring arrangements totaling $4.8 million, $4.0 million and $1.0 million for the fiscal years ended September 30, 2024, 2023 and 2022, respectively.
Unrecognized gains of $8.1 million ($6.0 million after tax) related to the terminated LIBOR-based swaps were also included in AOCI as of September 30, 2023.
Unrecognized gains of $3.8 million ($2.9 million after tax) and $8.1 million ($6.0 million after tax) related to previously terminated LIBOR-based swaps were also included in AOCI as of September 30, 2024 and 2023, respectively.
As collateral against sold receivables, Matthews RFC maintains a certain level of unsold receivables, which was $57.9 million and $44.3 million as of September 30, 2023 and 2022, respectively.
As collateral against sold receivables, Matthews RFC maintains a certain level of unsold receivables, which was $58.2 million and $57.9 million as of September 30, 2024 and 2023, respectively. 30 ITEM 7.
(2) Includes certain non-recurring costs associated with recent acquisition and divestiture activities, and also includes a gain of $1.8 million in fiscal year 2023 related to the divestiture of a business in the Industrial Technologies segment.
(2) Includes certain non-recurring costs associated with recent acquisition and divestiture activities, and also includes a gain of $1.8 million in fiscal year 2023 related to the divestiture of a business in the Industrial Technologies segment. (3) Includes certain non-recurring costs associated with commercial, operational and cost-reduction initiatives and costs associated with global ERP system integration efforts.
In March 2022, Matthews RFC entered into a receivables purchase agreement (“RPA”) to sell up to $125.0 million of receivables to certain purchasers (the “Purchasers”) on a recurring basis in exchange for cash (referred to as “capital” within the RPA) equal to the gross receivables transferred.
Matthews RFC has a receivables purchase agreement (“RPA”) to sell up to $125.0 million of receivables to certain purchasers (the “Purchasers”) on a recurring basis in exchange for cash (referred to as “capital” within the RPA) equal to the gross receivables transferred. The parties intend that the transfers of receivables to the Purchasers constitute purchases and sales of receivables.
Unamortized costs were $1.1 million and $1.7 million at September 30, 2023 and 2022, respectively. The Company and certain of its domestic subsidiaries sell, on a continuous basis without recourse, their trade receivables to Matthews Receivables Funding Corporation, LLC (“Matthews RFC”), a wholly-owned bankruptcy-remote subsidiary of the Company.
The Company and certain of its domestic subsidiaries sell, on a continuous basis without recourse, their trade receivables to Matthews Receivables Funding Corporation, LLC (“Matthews RFC”), a wholly-owned bankruptcy-remote subsidiary of the Company.
Capital spending for property, plant and equipment has averaged $48.7 million for the last three fiscal years. Capital expenditures for the last three fiscal years were primarily financed through operating cash. Capital spending for fiscal 2024 is currently estimated to be approximately $75 million.
Capital spending for property, plant and equipment has averaged $52.4 million for the last three fiscal years. Capital expenditures for the last three fiscal years were primarily financed through operating cash. Capital spending for fiscal 2025 is currently estimated to be in the range of approximately $50 million to $60 million.
Assuming market rates remain constant with the rates at September 30, 2023, a gain (net of tax) of approximately $3.9 million included in AOCI is expected to be recognized in earnings over the next twelve months. The Company has a U.S.
Assuming market rates remain constant with the rates at September 30, 2024, a gain (net of tax) of approximately $1.0 million included in AOCI is expected to be recognized in earnings over the next twelve months. 31 ITEM 7.
Under the current authorization, 1,195,013 shares remain available for repurchase as of September 30, 2023. Consolidated working capital was $253.7 million at September 30, 2023, compared to $217.2 million at September 30, 2022. Cash and cash equivalents were $42.1 million at September 30, 2023, compared to $69.0 million at September 30, 2022.
Under the current authorization, 611,321 shares remain available for repurchase as of September 30, 2024. Consolidated working capital was $197.8 million at September 30, 2024, compared to $253.7 million at September 30, 2023. Cash and cash equivalents were $40.8 million at September 30, 2024, compared to $42.1 million at September 30, 2023.
Investing activities for fiscal 2021 primarily reflected capital expenditures of $34.3 million, acquisition payments (net of cash acquired or received from sellers) of $15.6 million, proceeds from the sale of assets of $2.8 million , and proceeds from the sale of investments of $34.2 million.
Investing activities for fiscal 2024 primarily reflected capital expenditures of $45.2 million, acquisition payments (net of cash acquired or received from sellers) of $5.8 million, purchases of investments of $825,000, and proceeds from the sale of assets of $4.2 million .
The domestic credit facility requires the Company to maintain certain leverage and interest coverage ratios. A portion of the facility (not to exceed $55.0 million) is available for the issuance of trade and standby letters of credit. Outstanding U.S. dollar denominated borrowings on the revolving credit facility at September 30, 2023 and 2022 were $405.0 million and $428.0 million, respectively.
A portion of the facility (not to exceed $75.0 million) is available for the issuance of trade and standby letters of credit. Outstanding U.S. dollar denominated borrowings on the revolving credit facility at September 30, 2024 and 2023 were $410.5 million and $405.0 million, respectively.
The discounts on the trade receivables sold are included within administrative expense in the Consolidated Statements of Income. The proceeds from the sale of receivables are classified as operating activities in the Company's Consolidated Statements of Cash Flows. As of September 30, 2023, the amount of factored receivables that remained outstanding was $18.0 million.
The proceeds from the sale of receivables are classified as operating activities in the Company's Consolidated Statements of Cash Flows. As of September 30, 2024 and 2023, the amount of factored receivables that remained outstanding was $15.7 million and $18.0 million, respectively.
(7) Represents asset write-downs, net of recoveries within the SGK Brand Solutions segment (see Note 23, "Asset Write-Downs" in Item 8 - “Financial Statements and Supplementary Data”). (8) Represents goodwill write-downs within the SGK Brand Solutions segment (see Note 22, "Goodwill and Other Intangible Assets" in Item 8 - “Financial Statements and Supplementary Data”).
Fiscal 2022 includes goodwill write-downs within the SGK Brand Solutions segment of $82.5 million (see Note 23, "Goodwill and Other Intangible Assets" in Item 8 - “Financial Statements and Supplementary Data"), and asset write-downs net of recoveries within the SGK Brand Solutions segment of $10.1 million (see Note 24, "Asset Write-Downs" in Item 8 - “Financial Statements and Supplementary Data").
The favorable movements in working capital in fiscal 2021 primarily reflected increased trade accounts payable. Cash used in investing activities was $58.7 million for the year ended September 30, 2023, compared to $80.9 million and $13.0 million for fiscal years 2022 and 2021, respectively.
Cash used in investing activities was $47.0 million for the year ended September 30, 2024, compared to $58.7 million and $80.9 million for fiscal years 2023 and 2022, respectively.
There were no outstanding borrowings under the credit facility at September 30, 2023. Outstanding borrowings under the credit facility totaled €8.2 million ($8,050) at September 30, 2022. The weighted-average interest rate on outstanding borrowings under this facility was 2.25% at September 30, 2022. Other borrowings totaled $19.2 million and $13.4 million at September 30, 2023 and 2022, respectively.
There were no outstanding borrowings under the credit facility at September 30, 2024 or 2023. Other borrowings totaled $15.6 million and $19.2 million at September 30, 2024 and 2023, respectively. The weighted-average interest rate on these borrowings was 2.66% and 2.95% at September 30, 2024 and 2023, respectively.
An impairment loss would be recognized when the carrying amount of the assets exceeds the fair value, which is based on a discounted cash flow analysis.
An impairment loss would be recognized when the carrying amount of the assets exceeds the fair value, which is based on a discounted cash flow analysis. An asset considered held-for-sale is reported at the lower of the asset's carrying amount or fair value, less cost to sell.
The significant factors influencing organic sales growth in the Industrial Technologies segment include economic/industrial market conditions, new product development, and the electric vehicles ("EV") and e-commerce trends. The Industrial Technologies segment received over $200 million of new orders during the fiscal 2023 first quarter for its energy storage solutions business.
The significant factors influencing organic sales growth in the Industrial Technologies segment include economic/industrial market conditions, new product development, and the electric vehicles ("EV") and e-commerce trends.
Currency losses of $5.4 million (net of income taxes of $1.7 million), which represent effective hedges of net investments, were reported as a component of AOCI within currency translation adjustment at September 30, 2021.
Currency losses of $3.8 million (net of income taxes of $1.1 million), which represent effective hedges of net investments, were reported as a component of AOCI within currency translation adjustment at September 30, 2024. No such net investment hedges were outstanding as of September 30, 2023. The Company has a stock repurchase program.
Under the RPA, which matures in March 2024, each Purchaser’s share of capital accrues yield at a floating rate plus an applicable margin. The Company is the master servicer under the RPA, and is responsible for administering and collecting receivables. The proceeds of the RPA are classified as operating activities in the Company’s Consolidated Statements of Cash Flows.
The Company is the master servicer under the RPA, and is responsible for administering and collecting receivables. The RPA, which had a maturity date of March 2024, was amended in March 2024 to extend the maturity date to March 2026. The proceeds of the RPA are classified as operating activities in the Company’s Consolidated Statements of Cash Flows.
The Company has $299.6 million of 5.25% senior unsecured notes due December 1, 2025 (the "2025 Senior Notes"). The 2025 Senior Notes bear interest at a rate of 5.25% per annum with interest payable semi-annually in arrears on June 1 and December 1 of each year.
The 2027 Senior Secured Notes bear interest at a rate of 8.625% per annum with interest payable semi-annually in arrears on April 1 and October 1 of each year beginning on April 1, 2025.
MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued) The Company has a domestic credit facility with a syndicate of financial institutions that includes a $750.0 million senior secured revolving credit facility, which matures in March 2025. A portion of the revolving credit facility (not to exceed $350.0 million ) can be drawn in foreign currencies.
MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued) The Company has a domestic credit facility with a syndicate of financial institutions that was amended and restated in September 2024. The amended and restated loan agreement includes a $750.0 million senior secured revolving credit facility, which matures in January 2029, subject to the terms and conditions of the amended facility.
The weighted-average interest rate on these borrowings was 2.95% and 1.85% at September 30, 2023 and 2022, respectively. The Company operates internationally and utilizes certain derivative financial instruments to manage its foreign currency, debt and interest rate exposures.
The Company operates internationally and utilizes certain derivative financial instruments to manage its foreign currency, debt and interest rate exposures.
Previously, borrowings under the revolving credit facility bore interest at LIBOR plus a factor ranging from 0.75% to 2.00% based on the Company's secured leverage ratio. The secured leverage ratio is defined as net secured indebtedness divided by EBITDA (earnings before interest, income taxes, depreciation and amortization) as defined within the domestic credit facility agreement.
The leverage ratio is defined as total indebtedness divided by EBITDA (earnings before interest, income taxes, depreciation and amortization) as defined within the domestic credit facility agreement. The Company is required to pay an annual commitment fee ranging from 0.15% to 0.30% (based on the Company's leverage ratio) of the unused portion of the revolving credit facility.
The parties intend that the transfers of receivables to the Purchasers constitute purchases and sales of receivables. Matthews RFC has guaranteed to each Purchaser the prompt payment of sold receivables, and has granted a security interest in its assets for the benefit of the Purchasers.
Matthews RFC has guaranteed to each Purchaser the prompt payment of sold receivables, and has granted a security interest in its assets for the benefit of the Purchasers. Under the RPA, each Purchaser’s share of capital accrues yield at a floating rate plus an applicable margin.
If a tax authority agrees with the tax position taken, or expected to be taken, or the applicable statute of limitations expires, then additional payments will not be necessary. As of September 30, 2023, the Company had unrecognized tax benefits, excluding penalties and interest, of approximately $3.8 million.
Unrecognized tax benefits are positions taken, or expected to be taken, on an income tax return that may result in additional payments to tax authorities. If a tax authority agrees with the tax position taken, or expected to be taken, or the applicable statute of limitations expires, then additional payments will not be necessary.
The Company's obligations under the 2025 Senior Notes are guaranteed by certain of the Company's direct and indirect wholly-owned domestic subsidiaries. The Company is subject to certain covenants and other restrictions in connection with the 2025 Senior Notes. The Company incurred direct financing fees and costs in connection with 2025 Senior Notes.
The Company's obligations under the 2027 Senior Secured Notes are secured by a second priority lien on substantially all of the Company’s and certain of its domestic subsidiaries’ assets. The Company is subject to certain covenants and other restrictions in connection with the 2027 Senior Secured Notes.
The timing of potential future payments related to the unrecognized tax benefits is not presently determinable. The Company believes that its current liquidity sources, combined with its operating cash flow and borrowing capacity, will be sufficient to meet its capital needs for the foreseeable future. 30 ITEM 7.
The Company believes that its current liquidity sources, combined with its operating cash flow and borrowing capacity, will be sufficient to meet its capital needs for the foreseeable future. ACQUISITIONS AND DIVESTITURES: Refer to Note 22, "Acquisitions and Divestitures" in Item 8 - "Financial Statements and Supplementary Data," for further details on the Company's acquisitions and divestitures.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS: Refer to Note 3, "Accounting Pronouncements" in Item 8 - "Financial Statements and Supplementary Data," for further details on recently issued accounting pronouncements.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS: Refer to Note 3, "Accounting Pronouncements" in Item 8 - "Financial Statements and Supplementary Data," for further details on recently issued accounting pronouncements. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK: The following discussion about the Company's market risk involves forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements.
Operating cash flow for fiscal 2021 principally included net income (loss) adjusted for deferred taxes, depreciation and amortization, stock-based compensation expense, net gains related to investments, and non-cash pension expense, and changes in working capital items. Fiscal 2021 operating cash flow also reflected a $15.0 million discretionary contribution to fund the DB Plan.
Operating cash flow for fiscal 2024 principally included net income (loss) adjusted for deferred taxes, depreciation and amortization, stock-based compensation expense, goodwill and other asset write-downs, non-cash pension expense, gain on divestitures and sale of assets, and other non-cash adjustments, and changes in working capital items.
MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued) In March 2023, the Company, through its U.K. subsidiary, entered into a non-recourse factoring arrangement. In connection with this arrangement, the Company periodically sells trade receivables to a third-party purchaser in exchange for cash. These transfers of financial assets are recorded at the time the Company surrenders control of the assets.
In connection with this arrangement, the Company periodically sells trade receivables to a third-party purchaser in exchange for cash. These transfers of financial assets are recorded at the time the Company surrenders control of the assets. As these transfers qualify as true sales under the applicable accounting guidance, the receivables are de-recognized from the Company's Consolidated Balance Sheets upon transfer.
In light of the limited excess fair value over carrying value and further declines experienced by the SGK Brand Solutions reporting unit, management determined that a triggering event occurred during the fourth quarter of fiscal 2023, resulting in an interim assessment of goodwill for the reporting unit, as of September 1, 2023.
The Company determined that a triggering event occurred during the fourth quarter of fiscal 2024, resulting in a re-evaluation of the goodwill for the Surfaces and Engineering reporting unit as of September 1, 2024.
The following table sets forth a summary of receivables sold as part of the RPA: For the Year Ended September 30, 2023 2022 Gross receivables sold $ 393,493 $ 424,789 Cash collections reinvested (388,283) (328,199) Net cash proceeds received $ 5,210 $ 96,590 28 ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued) The following table sets forth a summary of receivables sold as part of the RPA: For the Year Ended September 30, 2024 2023 (Dollar amounts in thousands) Gross receivables sold $ 379,094 $ 393,493 Cash collections reinvested (384,594) (388,283) Net cash (payments) proceeds $ (5,500) $ 5,210 In March 2023, the Company, through its U.K. subsidiary, entered into a non-recourse factoring arrangement.
Cash used in financing activities for the year ended September 30, 2021 was $122.9 million, and principally reflected repayments, net of proceeds, on long-term debt of $76.8 million, purchases of treasury stock of $11.9 million, payment of dividends to the Company's shareholders of $27.7 million ($0.86 per share), $1.8 million of holdback and contingent consideration payments related to acquisitions from prior years, and $1.8 million of payments for the acquisition of noncontrolling interests. 27 ITEM 7.
Cash used in financing activities for the year ended September 30, 2024 was $35.0 million, and principally reflected repayments, net of proceeds, on long-term debt of $31.3 million, purchases of treasury stock of $20.6 million, payment of dividends of $31.4 million, payments of debt issuance costs of $10.2 million (see below), and proceeds from net investment hedges of $58.4 million (see below).
Capital spending in fiscal years 2022 through 2024 reflects additional capital projects to support new production capabilities and increased efficiencies within the Memorialization and Industrial Technologies segments. The Company expects to generate sufficient cash from operations to fund all anticipated capital spending projects.
The Company expects to generate sufficient cash from operations to fund all anticipated capital spending projects.
The Company is required to pay an annual commitment fee ranging from 0.15% to 0.30% (based on the Company's leverage ratio) of the unused portion of the revolving credit facility. The Company incurred debt issuance costs in connection with the domestic credit facility. Unamortized costs were $949,000 and $1.5 million at September 30, 2023 and September 30, 2022, respectively.
The Company incurred debt issuance costs of $4.9 million in connection with the amended and restated agreement, which were deferred and are being amortized over the term of the facility. Unamortized costs were $5.0 million and $949,000 at September 30, 2024 and 2023, respectively. The domestic credit facility requires the Company to maintain certain leverage and interest coverage ratios.
Dollar/Euro cross currency swap with a notional amount of $81.4 million as of September 30, 2023 and 2022, which has been designated as a net investment hedge of foreign operations. The swap contract matures in September 2027. The Company assesses hedge effectiveness for this contract based on changes in fair value attributable to changes in spot prices.
MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued) The Company utilizes certain cross currency swaps as net investment hedges of foreign operations and assesses effectiveness for these contracts based on changes in fair value attributable to changes in spot prices.
As these transfers qualify as true sales under the applicable accounting guidance, the receivables are de-recognized from the Company's Consolidated Balance Sheets upon transfer. The principal amount of receivables sold under this arrangement was $55.2 million during the fiscal year ended September 30, 2023.
The principal amount of receivables sold under this arrangement was $70.2 million and $55.2 million during the fiscal year ended September 30, 2024 and 2023, respectively. The discounts on the trade receivables sold are included within administrative expense in the Consolidated Statements of Income.
MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued) 2023 and 2022, the swap totaled $2.8 million and $3.7 million, respectively, and was included in other accrued liabilities and other assets in the Consolidated Balance Sheets, respectively. The Company previously used certain foreign currency debt instruments as net investment hedges of foreign operations.
Such amounts totaled $58.4 million, of which $17.4 million and $41.0 million were included in other current liabilities and other liabilities, respectively, on the Consolidated Balance Sheets at September 30, 2024. The Company uses certain foreign currency debt instruments as net investment hedges of foreign operations with a notional amount of €30.0 million ($33.5 million) as of September 30, 2024.
The Company expects to partially mitigate these cost increases through price realization and cost-reduction initiatives.
The Company expects to partially mitigate these cost increases through price realization and cost-reduction initiatives. The Company initiated cost reduction programs during the fourth quarter of fiscal 2024, which are primarily focused on the Company's engineering and tooling operations in Europe, as well as the Company's general and administrative functions.
Removed
(3) Includes certain non-recurring costs associated with productivity and cost-reduction initiatives intended to result in improved operating performance, profitability and working capital levels and costs associated with global ERP system integration efforts, net of loss recoveries of $2.2 million in fiscal year 2023 related to a previously disclosed theft of funds by a former employee initially identified in fiscal 2015.
Added
Fiscal 2024 also includes legal costs related to an ongoing dispute with Tesla, which totaled $12.4 million (See Note 19, "Commitments and Contingent Liabilities" in Item 8 - "Financial Statements and Supplementary Data"). Fiscal 2023 includes loss recoveries totaling $2.2 million which were related to a previously disclosed theft of funds by a former employee initially identified in fiscal 2015.
Removed
In March 2023, an amendment to the domestic credit facility implemented SOFR as the replacement of LIBOR as the benchmark interest rate under the facility. The Company accounted for the change in reference rate as a non-substantial modification.
Added
(7) Fiscal 2024 includes goodwill write-downs within the Industrial Technologies segment of $16.7 million (see Note 23, "Goodwill and Other Intangible Assets" in Item 8 - “Financial Statements and Supplementary Data"), asset write-downs within the Memorialization segment of $13.7 million (see Note 24, "Asset Write-Downs" in Item 8 - “Financial Statements and Supplementary Data"), and investment write-downs within Corporate and Non-operating of $3.1 million (see Note 8, "Investments" in Item 8 - “Financial Statements and Supplementary Data").
Removed
A loss of $2.1 million (net of income taxes of $701,000) and a gain of $2.8 million (net of income taxes of $940,000), which represented effective hedges of net investments, were reported as a component of AOCI within currency translation adjustment at September 30, 2023 and 2022, respectively.
Added
Fiscal 2024 amounts totaling $32.5 million, $1.4 million and $11.8 million were presented in cost of sales, selling expense, and administrative expense, respectively. Fiscal 2023 amounts totaling $9.0 million, $1.9 million and $2.3 million were presented in cost of sales, selling expense, and administrative expense, respectively.
Removed
Income of $1.2 million and $1.6 million, which represented the recognized portion of the fair value of cross currency swaps excluded from the assessment of hedge effectiveness, was included in current period earnings as a component of interest expense for fiscal 2023 and fiscal 2022, respectively. At September 30, 29 ITEM 7.
Added
Fiscal 2022 amounts totaling $1.8 million, $267,000 and $12.6 million were presented in cost of sales, selling expense, and administrative expense, respectively. Accrued severance and other employee termination benefits totaled $42.2 million and $7.3 million as of September 30, 2024 and 2023, respectively. 28 ITEM 7.
Removed
The Company enters into certain derivative contracts in accordance with its risk management strategy that do not meet the criteria for hedge accounting but which have the economic impact of largely mitigating foreign currency exposure. Changes in the fair value of these economic hedges are recorded in current period earnings as a component of other income (deductions), net.
Added
The change in working capital in fiscal 2024 primarily reflected lower inventory levels, higher accrued compensation related to severance and other employee termination benefits, changes in contract assets and liabilities related to products and services provided to customers over time, lower trade accounts payable, lower performance-based compensation accruals, and changes in other accounts.
Removed
During fiscal 2022, net gains from economic hedges (which largely offset losses from underlying foreign currency exposures) totaled $4.7 million. No such economic hedge contracts were outstanding as of September 30, 2023 or 2022. The Company has a stock repurchase program.
Added
The obligations under the domestic credit facility are secured by a first priority lien on substantially all of the Company's and certain of its domestic subsidiaries' assets. A portion of the revolving credit facility (not to exceed $350.0 million ) can be drawn in foreign currencies.
Removed
Payments due in fiscal year: Total 2024 2025 to 2026 2027 to 2028 After 2028 Contractual Cash Obligations: (Dollar amounts in thousands) Revolving credit facilities $ 463,168 $ — $ 405,000 $ — $ 58,168 2025 Senior Notes 337,875 15,750 322,125 — — Finance lease obligations (1) 10,307 3,034 3,840 2,170 1,263 Non-cancelable operating leases (1) 79,413 26,123 36,646 13,169 3,475 Other 28,380 1,037 17,624 2,299 7,420 Total contractual cash obligations $ 919,143 $ 45,944 $ 785,235 $ 17,638 $ 70,326 (1) Lease obligations have not been discounted to their present value.
Added
In September 2024, the Company issued $300.0 million aggregate principal amount of 8.625% senior secured second lien notes due October 1, 2027 (the "2027 Senior Secured Notes").

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+0 added−4 removed2 unchanged
Biggest changeDollar/Euro cross currency swap) with a notional amount of $81.4 million designated as a net investment hedge of foreign operations. The net unrealized loss for this swap contract at September 30, 2023 was of $2.1 million (net of income taxes of $701,000).
Biggest changeAs of September 30, 2024, the Company had cross currency swap contracts with an aggregate notional amount of $146.4 million designated as net investment hedges of foreign operations. The net unrealized loss for these swap contracts at September 30, 2024 was $8.5 million ($6.4 million after-tax).
Actuarial Assumptions - As of September 30, 2023, all of the Company's defined benefit plans are unfunded. The most significant actuarial assumption affecting pension expense and pension obligations is discount rates. A hypothetical decrease of 1% in discount rates would result in an increase of approximately $2.1 million in the projected benefit obligation.
Actuarial Assumptions - As of September 30, 2024, all of the Company's defined benefit plans are unfunded. The most significant actuarial assumption affecting pension expense and pension obligations is discount rates. A hypothetical decrease of 1% in discount rates would result in an increase of approximately $2.4 million in the projected benefit obligation.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK, (continued) Commodity Price Risks - In the normal course of business, the Company is exposed to commodity price fluctuations related to the purchases of certain materials and supplies (such as bronze ingot, steel, granite, fuel and wood) used in its manufacturing operations. The Company obtains competitive prices for materials and supplies when available.
Commodity Price Risks - In the normal course of business, the Company is exposed to commodity price fluctuations related to the purchases of certain materials and supplies (such as bronze ingot, steel, granite, fuel and wood) used in its manufacturing operations. The Company obtains competitive prices for materials and supplies when available.
Refer to Note 15, "Pension and Other Postretirement Plans" in Item 8 – "Financial Statements and Supplementary Data" for additional information. 34
Refer to Note 16, "Pension and Other Postretirement Plans" in Item 8 – "Financial Statements and Supplementary Data" for additional information. 36
A hypothetical decrease of 10% in market interest rates (e.g., a decrease from 5.0% to 4.5%) would result in a decrease of approximately $502,000 in the fair value of the interest rate swaps.
A hypothetical decrease of 10% in market interest rates (e.g., a decrease from 5.0% to 4.5%) would result in a pre-tax decrease of approximately $1.5 million in the fair value of the interest rate swaps.
As of September 30, 2023, the potential gain or loss in the fair value of the swap contract assuming a hypothetical 10% fluctuation in the market rates would be approximately $9.0 million. 33 ITEM 7A.
As of September 30, 2024, the potential pre-tax gain or loss in the fair value of these swap contracts assuming a hypothetical 10% fluctuation in the market rates would be approximately $15.9 million.
An adverse change (strengthening U.S. dollar) of 10% in exchange rates would have resulted in a decrease in reported sales of $69.5 million and a decrease in reported operating income of $3.4 million for the year ended September 30, 2023. As of September 30, 2023, the Company had a foreign currency derivative contract (U.S.
An adverse change (strengthening U.S. dollar) of 10% in exchange rates would have resulted in a decrease in reported sales of $65.0 million and a decrease in reported operating loss of $4.6 million for the year ended September 30, 2024.
The fair value of the interest rate swaps reflected a net unrealized gain of $4.0 million ($3.0 million after-tax) at September 30, 2023 that is included in equity as part of AOCI.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK, (continued) The fair value of the interest rate swaps reflected a net unrealized loss of $2.6 million ($1.9 million after-tax) at September 30, 2024 that is included in equity as part of AOCI.
Removed
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK: The following discussion about the Company's market risk involves forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements. The Company has market risk related to changes in interest rates, commodity prices and foreign currency exchange rates.
Removed
The Company does not generally use derivative financial instruments in connection with these market risks, except as noted below. Interest Rates - The Company's most significant long-term instrument is the domestic credit facility. U.S. dollar denominated debt under the domestic credit facility bears interest at variable rates based on SOFR (LIBOR for periods prior to March 2023).
Removed
The following table presents information related to interest rate contracts entered into by the Company and designated as cash flow hedges: September 30, 2023 September 30, 2022 (Dollar amounts in thousands) Pay fixed swaps - notional amount $ 175,000 $ 125,000 Weighted-average maturity period (years) 4.1 3.1 Weighted-average received rate 5.32 % 3.14 % Weighted-average pay rate 3.83 % 1.04 % The interest rate swaps have been designated as cash flow hedges of the future variable interest payments which are considered probable of occurring.
Removed
Based on the Company's assessment, all the critical terms of each of the hedges matched the underlying terms of the hedged debt and related forecasted interest payments, and as such, these hedges were considered highly effective.

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